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A report on Digitimes claims that Microsoft is currently designing a new HD-DVD equipped Xbox 360, citing anonymous sources within the Taiwanese optical disc drive industry.
According to the report, Microsoft is currently in the process of selecting manufacturers in Taiwan to build the internal drive, and if everything goes smoothly Microsoft could launch an HD-DVD equipped Xbox 360 in the first half of 2007.
Even if Microsoft was to release a new version of the Xbox 360 complete with internal HD-DVD drive, it’s highly unlikely that the new functionality will be utilised for anything but high definition movie playback. Using the higher capacity media of HD-DVD for video game releases would further split the Xbox 360 install base and would also alienate early adopters.
The external HD-DVD drive is expected to go on sale later this year, and full details regarding its release date, price and functionality are expected to be announced at X06 at the end of the month.