The word out of Digi Times today is that the Taiwanese manufacturerLite-On landed a contract to supply Microsoft with Blu-Ray disc drives to be used in the Xbox 360 product line and the first major shipment is to be in late 2008. Microsoft is currently not commenting on it but I am inclined to believe it for a number of reasons.

This is quite believable to me since Lite-On are already a supplier of optical disc drives to the Xbox 360 and Microsoft has always kept their options open technically and politically regarding bringing a Blu-Ray player to the Xbox 360. There are some media outlets that are going to far as to conclude that there is going to be an internal Blu-Ray drive in a future Xbox 360 and I am not likely to believe that as much as I believe that there is an external Blu-Ray player in the works.

Here are the main reasons why I think the eventual Blu-Ray player for the Xbox 360 is going to be external. The Jasper Xbox 360 motherboard is already well in the testing phase and they are putting on the final touches before ramping up manufacturing. I don't see the timing working out for it to be internal.

An internal Blu-ray drive would dramatically increase the cost of the Xbox 360 system and Microsoft is working hard to make the cost of the hardware as low as possible to reach a wide market. The phenomenal success of the Wii has them spooked and they want the cost of the Xbox 360 systems to go down as low as possible. They have never done a complete separate motherboard design and they would need to have extra hardware for Blu-Ray playback. Technically there is no difference between the Xbox 360 Arcade and the Xbox 360 Elite once you take all the external accessories off it. They made money off every external HD-DVD player sold and that business model would work out perfectly for a Blu-ray player. The cost of the a Blu-Ray drive is about $80 more than a DVD drive and I think it would be extremely unlikely that they would want to increase the cost of the 360. However an external Blu-Ray drive priced the same as a HD-DVD drive before the clearance would work great........Click source to read on.