When Microsoft launched the Xbox 360, many wondered why when the PS3 was going to have a next-gen Blu-Ray DVD player built-in, didn't the Xbox have something similar. But it now appears that rumours are circulating the internet that Microsoft and Toshiba are secretly working on a new Xbox 360 with an HD-DVD player built-in.

According to reports from Australian website Smarthouse, insiders at Toshiba have leaked information that a new model will not only feature HD-DVD, but also 1080p playback, a larger hard drive, Wi-Fi, dual high-def tuners and EPG capability, as well as a docking port for MP3 players (Zune anyone?).

The theory is that as PS3 is driving sales of Blu-Ray discs, then having an HD-DVD drive in a popular games console will do the same trick. Also GFK research found that that the recently launched Xbox 360 HD-DVD add-on isn't selling as well as expected (well for a start - where do you put it?). Other reasons bandied around is the lack of an HDMI port on the console, omitted as Microsoft wanted to cut costs of the console to broaden appeal.

A senior Toshiba executive in Singapore told SmartHouse that "An Xbox with a built in HD DVD drive is critical. They and we are working on it. It also has to be more than a gaming machine. Microsoft recognise this. A version of the device may also be sold under the Toshiba brand name".

Another rumoured development could see Xboxes slotted into a bay in an HD TV. Of course what would be of most benefit to Xbox users would be a console that wasn't so loud, then we could enjoy our movies in peace! That and a console that didn't break down so much. Apparently they are working on that too!