Xbox 360 to come with built-in HD-DVD drive

Sources in Taiwan’s optical disc drive (ODD) industry point that Microsoft is working on a new generation of Xbox 360′s which will be equipped with an internal HD-DVD drive and is selecting manufacturers in Taiwan to build the drive. Microsoft will offer an external HD-DVD drive for its Xbox 360 at around the end of this year, in an attempt to compete with the Sony PlayStation 3 (PS3), which will have a built-in Blu-ray Disc (BD) drive. However the external HD-DVD drive can only playback movies.

If the process of selecting partner makers and subsequent certification goes smoothly, Microsoft may launch the Xbox 360 equipped with the built-in HD-DVD drive in the first half of 2007.