Rumors suggesting that Microsoft is soliciting drive makers to build an internal HD-DVD drive for the Xbox 360 have resurfaced.
Digitimes, the site that broke the blue diode shortage story, reports that Microsoft has started to design a "new-generation" Xbox 360 equipped with an internal HD-DVD drive. According to the site, sources indicate that Microsoft is in talks with drive makers to build an internal HD-DVD drive to include with 360 consoles, possibly as early as next year.
This is speculation of course, and the existence of millions of 360's in homes with regular DVD drives would still preclude any HD-DVD games in the future. The upcoming external HD-DVD player will only support movie playback.