M-Systems CEO Dov Moran said in an interview with Israeli business newspaper Globes that "Microsoft has taken the hard disk out of its Xbox. The only thing left will be a CD; that's all."
A Microsoft represenative called Moran's comments "speculation" but declined to comment further.
M-Systems announced an agreement late last month with Microsoft to supply flash-based storage devices for future versions of the Xbox. Company executives said they couldn't give details on what the devices would be, but Moran's comments confirm speculation that they will replace the 8GB hard drive built into current game consoles.
"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," Moran told Globes.
Microsoft originally touted the hard drive as one of the key features distinguishing the Xbox from competing consoles, but the storage has not been utilized by software publishers to change the way games work. Instead, the hard drive is mainly used for small-scale storage operations such as saving data on progress in a game, and for nongame functions such as saving music tracks "ripped" from CDs.
Analysts have said that dropping the hard drive could trim at least US$20 per unit from production costs for the money-losing game console.
Microsoft has consistently refused to divulge details on the next version of the Xbox beyond new agreements with component suppliers, including graphics chip maker ATI Technologies and IBM, which will make the main processor for the console. The company is believed to be preparing the next version of the Xbox for delivery late next year and is expected to share details with game makers later this month at the Game Developer's Conference.
I believe that this has less to do with trimming $20 from the cost and more with preventing clever LINUX users from turning the Xbox into a reasonably powerful, low cost, entry level computer. Microsoft can't sell them an OS and they probably aren't going to buy many games. I accept that the xbox is currently priced with the intention of making money only on the games and breaking even or sustaining a small loss on the console however this seems to me not a particularly intelligent way of controlling the way people use it and the use they make of it. Surely, with a bit of imagination they could capitalise on the strengths of the machine.