Dov Moran, CEO of M-Systems, the company which has been contracted by Microsoft to provide flash memory storage for Xbox 2, has told an Israeli newspaper that the next-generation console will not have a hard disc drive.
This is the first time that anyone connected with the development of the system has gone on record about the issue of the hard drive, although sources at Microsoft and key developers have told us that it was unlikely that a hard drive would be included in the console.
"Microsoft has taken the hard disc out of its Xbox," Moran told Israeli business website Globes Online. "At some point, when users want to save their e-mail messages, copy music, or anything like that, the only storage theyâll have is what we give them."
M-Systems, which is best known for manufacturing USB flash drives that fit onto keyrings but also provides multi-gigabyte flash storage units for military use, has previously said that the memory solution it is creating for Xbox 2 will be significantly different to its current product line.
However, even though the question of the hard drive is very much in the public domain now, Microsoft was quick to dismiss Moran's comments - with Xbox group product manager David Hufford breaking with the standard "we don't comment on rumours and speculation" response to tell US website Gamespot that Moran was "talking way over his head."
"Mr. Moran is aimlessly speculating, and we never comment on speculation," he commented. "We've made no such announcements about future Xbox products and services. And we don't intend to for quite a while. Until we do, we suggest people take guesswork for what it is."
In fact, it's fairly well accepted that Microsoft does intend to make an announcement about Xbox 2 shortly - with a conference scheduled alongside the Game Developers Conference event in San Jose at the end of this month expected to put early specification details out in the public eye.
It's not clear, however, whether the company has actually made its mind up about the hard drive issue as yet. Although it looks increasingly likely that a decision has been made to drop the component, some developers we've spoken to claim that Microsoft is still seeking opinions and feedback on the concept from its partners.