Australian lifestyle technology publication SmartHouse claims that a Toshiba executive told them that a new Xbox 360 with a built-in HD DVD drive is in the works. The device would have been crafted in response to the PS3 driving sales of games software and Blu-ray movies in several countries.
A recent Sony Brand Wave study conducted in five countries including the UK, Australia, France Germany and Spain revealed that a key reason that consumers are buying a PS3 is because it includes a Blu-ray player.
Recent GFK research reveals that the recently launched Xbox 360 HD DVD attach player is not selling well. Another factor that impacted early sales of the Xbox 360 was that Microsoft failed to include a HDMI port - omitted because Microsoft wanted to cut down the costs of the console in an effort to compete up against the PS3.
A senior Toshiba executive in Singapore told SmartHouse that "An Xbox with a built in HD DVD drive is critical. They and we are working on it. It also has to be more than a gaming machine. Microsoft recognise this. A version of the device may also be sold under the Toshiba brand name".
SmartHouse also that this new Xbox 360 will be positioned as an entertainment hub that includes gaming and extensive wireless networking capability as well as 1080p playback.
There is also talk of it including a dual HD TV tuner and EPG capability and a docking port for an MP3 player. For Toshiba, the device is critical if it is to be successful in beating Sony and the Blu-ray promoters.
Also being discussed is the development of an open standard docking port similar to the 17 pin iPod port. This would allow all manufacturers to use the same port for docking.
In the past, Microsoft has denied rumors of games coming in HD DVD or having a built-in HD DVD drive, because the existing HD DVD drives read DVDs at a lower speed than the current Xbox 360 drive. May be Toshiba has developed an HD DVD drive than can read DVDs at the required speed Xbox 360 games demand.


