Microsoft seems to be having a hard time making up its mind on whether or not to put a HD-DVD drive into the Xbox 360 -- and even if they did, they are having a hard time figuring out whether or not the drive will be for data and movies, or just movies. Just a few days ago, a Microsoft spokesperson said that Microsoft has "no plans" on putting a HD-DVD drive into the Xbox 360. In August, Bill Gates said that Microsoft is "looking at whether future versions of Xbox 360 will incorporate an additional capacity of an HD-DVD player or something else". Last month, Yoshihiro Maruyama (the head of Xbox operations in Japan) said that there are "possibilities" of the Xbox 360 getting a HD-DVD drive, but only for movie playback. So...hmm...Which is it guys? For now, Microsoft can save money by using only a standard cheap DVD drive. The current storage capacity of the DVD drive in the Xbox 360 is fine for Microsoft, until Sony releases the PS3 which will incorporate Blu-ray. A single-layer Blu-ray disc can hold up to 27GB of data, a dual-layer Blu-ray disc can hold up to 54GB of data. That is in comparison to the capacity of the dual-layer DVD, which is around 9GB. When the PS3 hits the market, Microsoft will be faced with one huge problem. Game developers will have massive storage with Blu-ray when compared with DVD. What can Microsoft do at that point? If they don't integrate HD-DVD, then their Xbox 360 is yesterday's news. All the talk about HDTV support is nice, but the damned thing only plays standard SDTV DVDs. What's more, given the extra storage of Blu-ray, the content on PS3 games will be a lot higher-res than Xbox 360 stuff. I mean, come on, given extra storage, a game company will use it: Higher res pre-rendered movies, higher res textures, higher polygon counts for models, better sound samples, and all the other stuff that takes up more space. If they do integrate HD-DVD, then the early adopters of the Xbox 360 platform will get a $500 slap in the face. And developers will have to figure out whether they develop a game for standard DVD capacities, HD-DVD capacities, or both. And when they develop for both -- and why wouldn't they? -- then the consumer will be confused. Which Xbox 360 do I have? Which version of the game do I pick up? Confused consumers are the worst consumers around -- and when there is Sony and Nintendo on the market also, confused consumers will go to the path of least resistance. Sony for powerful next-gen game play and Nintendo for cool niche next-gen game play. The consoles are only an aisle away at that point. Microsoft screwed the pooch with their early launch. When the PS3 comes out with higher storage capacity, the Xbox 360 will be left in the dust unless Microsoft is willing to take the heat for releasing a new version of the Xbox 360 with HD-DVD. I think Microsoft will take a wait and see approach. They will continue to sell their Xbox 360s with a standard DVD drive in it until the PS3 comes out. If the PS3 is a hit (which, most likely it will be) then Microsoft will go ahead and integrate a HD-DVD drive into the Xbox 360. If the PS3 is not a hit (hardly a chance, unless Sony screws up badly) then Microsoft will continue to sell DVD version of the Xbox 360.