HD-DVD Xbox 360 already in the works?

A report on Australian technology site

Smarthouse

claims that Microsoft and Toshiba are working on a brand new Xbox 360 that incorporates an HD-DVD drive, larger hard drive and a revised version of its Media Centre software.

It is said to be in development as a response to Sony’s Blu-Ray drive, supposedly because Blu-Ray is named as a key factor in many gamer’s decision to purchase a PS3. In addition, the site claims that both Toshiba and Microsoft are unhappy with sales of the currently available 360 HD-DVD add-on.

The new model is said to be positioned as a multimedia hub, and will no doubt be designed to run hand-in-hand with Microsoft’s growing movie and TV content service, which itself has not yet launched in Europe.