New generation of Xbox 360s with integrated HD-DVD?

According to Digitimes, news from Taiwan is that Microsoft are looking for HD-DVD drive manufacturers for an already in the works second generation Xbox 360 that will include one internally.

Currently, Microsoft plans to sell an external HD-DVD drive before the end of 2006, which should help it compete against the PS3. According to the source at Digitimes, though, this external HD-DVD drive can only play back movies - it will not be used for game production.

The earliest time scale for the new, updated 360 would be in mid-2007, which would make it 18 months since the Xbox 360s initial release. This isn't an unheard of time for product revisions, though the cost of the original units might still leave early adopters miffed. It's plausable that they could probably aim to include a die shrink to 65nm from IBM around the same time, to get more chips per wafer and offset the cost increase of including a HD-DVD unit, offering an even better value against Sony's PS3.

The external drive is at best an awkward addition to the 360, so offering an internal HD-DVD unit in future SKU would make for a viable option. Particularly since no external HD-DVD units will be offered in Asia (due to the lack of blue laser diodes and current lack of next-gen content), a whole new revision could potentially work out very well for Microsoft and HD-DVD in the next generation battlefield.

Would you be interested in a new generation of 360s with integrated HD-DVD? Or are you upset that Microsoft previously said they wouldn't offer an internal HD-DVD? Let us know your thoughts in our forums.