Microsoft's next-generation Xbox console is set to feature a removable hard drive bay, according to online reports today, which will allow users to upgrade their entry-level systems to include mass storage capabilities.

Citing a "reliable source", technology news site Engadget revealed details of the removable hard drive, claiming that the unit attaches to the top of the console "in a really slick way, almost like the hood scoop on a muscle car."

The report tallies with claims from developers working on the system, who have told GamesIndustry.biz in the past that Microsoft has disclosed that there will be a mass storage device, but that they should not rely on its presence for their games.

It's been assumed for some time that this means that Xbox 2 will be sold in at least two basic configurations - with and without a mass storage unit - and today's report seems to indicate that it will be possible to upgrade between those models by adding the hard drive.

One vital question, however, is whether this hard drive will simply be a sealed memory unit (which may actually be a hard drive, or may be a very high capacity flash drive) or if it will sport a screen and buttons, allowing it to be used as a portable media player.

Comments made to GamesIndustry.biz by sources who claim to have seen the new console suggest that the latter may be the case - resurrecting the "xPod" rumours which originally surfaced last year, after XNA boss J Allard allegedly told fellow snowboarders in a bar at a Canadian resort that the next Xbox would come with an iPod style media player.

Engadget also reports, from the same source, that the new console is set to be called "Xbox 360" when it hits the market; at present, the only official moniker attached to the project is "Xenon", its development codename.

Microsoft has reported tested a number of names on consumer focus groups, and is believed to be determined not to launch as "Xbox 2" - just as rival Sony is apparently keen to drop the numbering system from its next PlayStation console.

"Xbox 360", "Xbox Next" and "NeXtBox" have all been suggested as names that the company is considering in the past few months - and if those sound too convoluted to be real, it's worth bearing in mind that according to UK tech news site The Inquirer, the current frontrunner for the name of the next Windows operating system