Whilst the gaming press continues to deliberate over whether Microsoft will or won’t include a hard-disk in their next iteration of the Xbox hardware, the weekend’s juiciest rumour has to be that a HDD peripheral will in fact be sold separately by Redmond, and will double as an ultra-sleek portable entertainment player too. And let’s be honest, that would be ace.

This rumour apparently emerged from a snowboarder who enjoyed a heavy drinking session with Microsoft’s J Allard before reporting his revelations to tech site Engadget.com, who immediately published the speculation. As you’ll read below, more exciting still is the price tag of $100 reportedly touted by Allard, who stated the firm would sell the upgrade at a loss making it an ‘iPod killer’.

The piece reads, “Regarding the Xbox 2 hard drive, I was snowboarding in Whistler, B.C. from February 19 – 26, 2004. We were in a bar called the Amsterdam Cafe in the village one night and J. Allard, the head of Microsoft’s Xbox division was in the bar with some friends. I recognized him from a recent Business 2.0 article and we started talking. He bought my friends and I a round of drinks he called Hey Zeuses – they were Red Bull and tequila and they were nasty.”

It goes on to say “Anyway, we were talking about the Xbox 2 and he said their current plan was not to include a hard drive in the Xbox 2 itself, but to offer a portable hard drive as an accessory you could buy separately. Here’s the kicker: He said what they were trying to do was to incorporate MP3 (and WMA, obviously) functionality into the portable hard drive and turn the thing into an iPod killer. Basically, the idea was to come up with an MP3 player that was as good or better than the iPod that would also serve as the hard drive for the Xbox 2. And he said they planned to sell them as a loss leader at $100 each.”

Quite whether game developers will warm to the idea of an HDD available only as an upgrade, or whether the Xbox 2’s much rumoured flash-based storage will suffice, remains to be seen. However, bear in mind this is just idle gossip and a Microsoft spokesman did tell GameSpot that this was definitely a rumour at this stage.

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