Pale: Yes, ATI officially stated they work with MS now.
I think all this "team up on someone" stuff is bull####. Why should they team up? Sony doesn't need a partner, they're doing well without one. MS wants total domination, a partner would eventually get in the way. Nintendo produces good games and hardware by itself, all a partner could give it would be image. And that doesn't justify the cost of a partner.
For the japanese people and companies the XBox is just a bug waiting for the boot to squish it, so why bother? After all, the japanese sales numbers don't put the XBox anywhere above the NeoGeo, CDi or other failed "bug consoles".