An Internal HD DVD Drive for the Xbox

According to Digitimes and Newlauches.com, Microsoft is currently working on a new version of the Xbox 360. The new unit would be equipped with an internal HD DVD drive. Microsoft is currently selecting a manufacturer for the drive. The new version could be available in the first half of 2007. 

This looks like a defensive move by Microsoft after the announcement by Sony that the PS3 would be equipped with an internal Blu-ray drive.

Microsoft is expected to launch an external HD-DVD drives for its Xbox 360 at a retail price of US$200 by Christmas of this year.