According to statements made by Bill Gates in Japan, the 360 may incorporate an HD-DVD drive eventually into its hardware specs. However, in order to meet this fall's launch date, the 360 will be equipped with regular DVD-ROM drives initially, and upon their (HD-DVD drive) availability, will be adopted instead. Also, the HD-DVD drives will support HD movie playback only, i.e. don't expect increased storage for games. Here's the article.