Microsoft shoots down talk of HD-DVD equipped Xbox 360 -- Posted by XanTium on December 15 08:55 EST
From gamesindustry.biz:
[QUOTE]
Microsoft has cleared up speculation regarding possible HD-DVD functionality in future versions of the Xbox 360, saying that it currently has no plans to release an Xbox 360 equipped with a next-generation DVD player.
The unusually direct statement is a straightforward denial of a report from a Japanese news service yesterday, which claimed that the company planned to launch an HD-DVD compatible Xbox 360 in 2006.
[/QUOTE]

Read More: gamesindustry.biz.

I would not be surprised either way on this. My guess is that they will not use HD DVD, but will release larger hard drives to allow downloading (and paying for of games over the internet in 720p. As bandwiths increase this may become a more practical option, especially since we do not know which of the two formats (HD DVD or blu-ray) will be successful.

It's unfortunate the Xbox 360 can only use 7GB from the 9GB for game data.
I guess most games will just fit on 1 DVD, and some others might need 2 DVD's (or more) in the future.
But for movies it's still to soon to tell what format will be used. Likely blueray, but since it's from Sony, MS won't/can't use it.

well even if ms did decide to go with hd-dvd in the future, i don't think they would tell us now... we'd stop buying the current version and wait... not a smart marketing idea there. and im sure they could use blu-ray, they'd just have to pay out the ass for it.

instead of a HD-DVD "equipped" xbox 360 - it will most likely be a USB 2.0 HD-DVD external drive - so that any xbox 360 user can upgrade rather than making a couple million systems out of date right after launch.

Which will mostlikely work on PC as well and be usable for both the 360 and the PC just like the controller which isnt a bad idea