According to Microsoft execs, the Xbox 360’s HD-DVD drive will be released this holiday season, at a price well below that of other HD-DVD players.

Earlier this week Microsoft senior program manager Kevin Collins demonstrated the Xbox 360’s external HD-DVD drive at the North America DVD Forum Conference in Los Angeles. According to a CNET article, Collins confirmed the device will be available during the 2006 holiday season.

Collins noted that the drive, which was about the size of a hardback book, will not include audio and video processing hardware. Instead, those functions will be handled by the 360. Collins said that as a result, for 360 owners the device will be among the least expensive HD-DVD player options on the market. Collins cited research indicating most Xbox owners already own high-definition displays, and commented that the external device “gives consumers choice and helps keep costs down.” Collins did not disclose the device’s anticipated retail price, however.

GameSpot reported that during the most recent podcast by Microsoft Xbox Live programming director Larry Hryb (aka Major Nelson), Microsoft’s director of global marketing Albert Penello also commented on the device’s price. “Here’s the truth,” he said. “We’re still thinking about it. Here’s what I can tell you for sure, it’s going to be the cheapest HD-DVD player you can buy … without a doubt, when it comes out.” Penello added, “There’s still a few surprises left. I don’t want to spill the beans yet, but I think people are going to think it’s a great value.”

Movie playback could become an important factor in next-gen gaming hardware sales, depending upon whether consumers favor HD-DVD media or the higher-capacity Blu-Ray format. There are only a few HD-DVD players available at present, and the lowest-priced models currently retail for about $450. Sony’s PlayStation 3 is scheduled to launch this fall with an internal Blu-Ray player and will be available in $499 and $599 models. The least expensive Blu-Ray players on the market currently retail for about $700.

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