Microsoft has started designing a new-generation of Xbox 360's equipped with an internal HD-DVD drive and is selecting manufacturers in Taiwan to build the drive, according to sources in Taiwan's optical disc drive (ODD) industry.
Microsoft will offer an external HD-DVD drive for its Xbox 360 at around the end of this year, in an attempt to compete with the Sony PlayStation 3 (PS3), which will have a built-in Blu-ray Disc (BD) drive, the sources indicated. The external HD-DVD drive, however, can only play back movies, the sources noted. If the process of selecting partner makers and subsequent certification goes smoothly, Microsoft may launch the Xbox 360 equipped with the built-in HD-DVD drive in the first half of 2007 at the soonest, the sources noted.
View: The full story
News source: DigiTimes
Microsoft will offer an external HD-DVD drive for its Xbox 360 at around the end of this year, in an attempt to compete with the Sony PlayStation 3 (PS3), which will have a built-in Blu-ray Disc (BD) drive, the sources indicated. The external HD-DVD drive, however, can only play back movies, the sources noted. If the process of selecting partner makers and subsequent certification goes smoothly, Microsoft may launch the Xbox 360 equipped with the built-in HD-DVD drive in the first half of 2007 at the soonest, the sources noted.

Winner!
Why? This is a console, not a PC. You don't want to fragment the console market with Product A, then Product A.2, A.3, etc.
All consoles being identical is the primary reason they have any benefit over a PC. Don't start changing components within the same generation. I thought that was obvious?
Microsoft wouldn't release a game on HD-DVD simply because the console didn't ship with one. I can just see it now, "hey, you know that console you just paint $400 bucks for? It's obsolete, time to upgrade".
I doubt this rumour is true anyway.
Commenting has either been disabled on this article or you are not logged in. Click here to login or register, its free!
Note: Anonymous commenting is disabled in order to keep the quality of responses to a high standard.