There have been some rumors about this. What do you think?

quoting hddigest
The latest round stems from remarks attributed to an unnamed senior Toshiba executive in Australia, who told Aussie tech site Smarthouse that "An Xbox with a built in HD DVD drive is critical. (Microsoft) and we are working on it. It also has to be more than a gaming machine. Microsoft recognise(s) this. A version of the device may also be sold under the Toshiba brand name."
Smarthouse goes on to state that the new device is planned for release in 2008 or at the 2009 CES show in Las Vegas.
Given the reported timing and the vagaries of the high-def format war, its no surprise Microsoft isn't commenting. But the prospect of an HD DVD-enabled game console that would go head-to-head with Sony's PS3 certainly has early adopters talking.
some forum post responses

I think this would be great for HD DVD owners, but if this is true this certainly makes the argument for owning a PS3 for Blu-Ray playback all the more valid and also shows me that Sony had more vision than many people give them credit for.
Economically, it's a classic example of a long-term investment vs. a quick buck. Microsoft is making a good but quick buck, offering a good value for money--in the short term.
It kinda sucks that some people have to buy a new console to get new features but it's better than not having the option for those features at all.

It is also better to release a new version with MORE features not LESS features.
good points there


My personal opinion .... ah, you already know
So PS3 did this 2 years before Microsoft/Toshiba will, by that time PS3 will be cheaper than this Xbox whatevernumber and will already have same features that Xbox is gonna get two years later
And you call us (me) PS3 fanboy crazy? ... oh cmon