In an interview with Globe, M-Systems President and CEO Dov Moran confirmed what gamers have been speculating for months. Xbox 2 won't have a hard disc. When asked about its technology development agreement with Microsoft Corporation, Mr Moran said: ”It’s a cooperation agreement. The potential isn’t clear, but it’s in the billions of dollars. Microsoft has taken the hard disk out of its Xbox. The only thing left will be a CD; that’s all. At some point, when users want to save their e-mail messages, copy music, or anything like that, the only storage they’ll have is what we give them. It’s worth hundreds of millions to the company, spread over a few years, and we’ll be the main supplier for it; and I hope the sole supplier.

When contacted by GameSpot, Xbox group product manager David Hufford said Moran was "talking way over his head." He continued, "Mr. Moran is aimlessly speculating, and we never comment on speculation. We've made no such announcements about future Xbox products and services. And we don't intend to for quite a while. Until we do, we suggest people take guesswork for what it is." However, if Moran's statements are true, the Xbox Next will likely not be backwards compatible, since it would be almost impossible for it to emulate how some games dump data onto the Xbox's hard drive.