Microsoft Corporation (NASDAQ: MSFT) and Sun Microsystems, Inc. (NASDAQ: SUNW) today announced that they have entered into a broad technology collaboration arrangement to enable their products to work better together and to settle all pending litigation between the two companies. The companies have also entered into agreements on patents and other issues.

"This agreement launches a new relationship between Sun and Microsoft -- a significant step forward that allows for cooperation while preserving customer choice," said Scott McNealy, chairman and CEO, Sun Microsystems, Inc. "This agreement will be of significant benefit to both Sun and Microsoft customers. It will stimulate new products, delivering great new choices for customers who want to combine server products from multiple vendors and achieve seamless computing in a heterogeneous computing environment. We look forward to this opportunity -- it provides a framework for cooperation between Sun and Microsoft going forward."

An on-demand webcast of the news conference is here.

A transcript is provided here.