[quote name='Rig'][quote name='craigjm']I definitely don't want to see them do like SONY and cut out the Hard Drive support to get slimmer. That's a dumb idea.[/quote]
But, news coming out of Microsoft right now is that Xenon (Xbox 2) won't have a hard drive, and may or may not play Xbox 1 games on it! Of course, none of this has been confirmed, but that is what will (most likely) happen. I hope it doesn't. On-topic, I don't think they will slim down the Xbox.[/quote]
There is two separate issues there. Backward compatibility is contingent on NVIDIA providing a very low-cost license for their proprietary IP. This is very unlikely, especially since archrival ATI would need to see that IP to perform their end of the job. The only way ATI could do this would be to dump the negineers involved after the project was completed since they would be seen as contaminated in a legal sense by their exposure to NVIDIA's material.
The lack of a hard drive doesn't mean the Xbox 2 won't feature a substantial amount of local writable storage. The big question is how much capacity is needed. The majority of Xbox users, including those on Xbox Live with all available downloads and such, have barely used the capacity of their drives. Yet those drives have proven to be one of the great distinguishing features of the Xbox. So having a good chunk of local storage beyond dinky memory cards is a good thing.
The problem is that a hard drive is overkill for the purpose and expensive at that. The primary components in a game console need to decrease over time to allow retail price drops and continued sales momentum. Areal densities increase but the basic cost of commodity drive doesn't go down. The cost of putting a hard drive in a PC hasn't changed much in the past five years even though the value in terms of capacity has increased. This doesn't help a game console which just isn't ever going to need all of that capacity.
The answer is flash memory. If you're setting a fixed amount per system yo can look forward to major cost reductions over time. It wasn't that long ago that a 1 GB CFII card was considered an astounding feat, even at a cost of several hundred dollars. That same card now sells for under $100. By this time next year it should be down to $50. This means Microsoft can start with a system that sells at a loss due to the cost of parts but will soon after offer a break even cost and further decrease to support cutting the retail SRP without taking a major hit on each unit sold.
Furthermore, by using a standard format like Compact Flash there is the option to allow users to add more capacity as desired without taking up a lot of space in the unit. A set of two or four card slots take sup little space, the controller adds very little cost to the chipset, and the use ofa standard format allow users to benefit as the digital camera, music player, and other markets for flash memory driver increased capacities for lower cost.