Smarthouse has posted an article regarding an unconfirmed new version of the Xbox 360 videogame console with onboard HD DVD.

They state that "insiders" at Toshiba have revealed that Microsoft is developing a new Xbox 360 with an internal HD DVD drive. Also rumoured for the new hardware, extensive wireless capabilites, HDMI, and 1080p playback. In addition their source claims that a dual HDTV tuner and an iPod/mp3 player docking port are possibilities. With these features one might speculate that Microsoft would be adding some additional media center capabilities to the dashboard, and marketing the new unit as a media hub that bridges your home network and home theater together. They quote a "senior Toshiba executive in Singapore" as saying "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". If this new hardware does make it past development, it's anyone's guess whether Microsoft will reveal the new unit at this spring's E3, or whether they would choose to wait for a consumer electronics expo, in which case CES 2009 would be the obvious pick.

The Xbox 360 already has the capability to stream music and images from your home computer. The new capabilities would have to be more ambitious than just an additional dashboard "blade", and would hopefully enable the ability for users to play alternative video formats, namely divx and xvid.