Toshiba working with Microsoft on multi-media hub Smarthouse, an Austrailian technology site, has reported that Microsoft is working on a new Xbox 360 console that will include a built-in HD DVD drive.

Microsoft currently sells an HD DVD player as an attachment for the Xbox 360, but it has not revealed sales figures for the peripheral. According to the article the new Xbox console 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 including a dual HD TV tuner and EPG capability and a docking port for an MP3 player.

Toshiba owns the HD DVD patents, and recently entered into an agreement with Sony to jointly manufacture cell processing chips, despite the fact that Sony is the lead backer of the Blu-ray Disc format competing with HD DVD.

A senior Toshiba executive in Singapore told SmartHouse "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 [sic] this. A version of the device may also be sold under the Toshiba brand name."

"The PS3 has been extremely successful for Sony in getting Blu-ray off the ground and for Microsoft, the omission of a built in HD DVD player is set to hurt sales going forward as consumers are aware that the PS3 comes with a Blu-ray player," said Scott Browning, the marketing director of Australian electronics retailer JB HiFi.

According to the article, the new console will be released late in 2008 or at the January 2009 CES show in Las Vegas.

News-Source: GamesIndustry