As you can probably surmise, they found much of the cost is taken up by the needless packaging and design required by Microsoft in order to ensure the drive works only in your 360 console. Some the biggest contributors to its inflated price (ie prices beyond the HDD itself) include:

- The HDD ships not only with pre-installed software (demos and/or XBLA games), but part of the console's OS itself. This = increased costs.

- The HDD must be coloured and shaped to fit inside the specially-designed housing that ensures only your 360 can use the unit. That's more extra expenditure. This is done by a "Value Added Reseller", who also take care of the HDD's retail packaging.

- Microsoft have at this point paid an estimated $100 (iSuppli can only go estimates, though as specialists in this stuff their numbers won't be far off), and then split the remaining $80 profit with retailers and distributors (a 120GB HDD retails for $180).

Now you know why they're overpriced, feel free to keep on avoiding them.

Hardware Analyst Breaks Down Cost Of Xbox 360's 120GB Hard Drive [MTV]

You're a gamer, I'm a gamer, we're connected to Live, we want to download content, so for us, we definitely want a hard drive...That's definitely the right solution for us, and frankly for a large majority of our customers. For my friends that want to go online and get the complete entertainment experience, I definitely recommend that they get the Pro or Elite console.

At the same time, with the launch of the Arcade console this past holiday, you talk to some of our mass market retailers that talk to a very different type of consumer, [and they'll tell you the Arcade model] sold out when we originally launched. They've performed extremely well.

Greenberg appeared on a recent Game Theory podcast to help deflect some consumer rage.

If you compare what we are offering with a real plug-and-play drive the closest thing would be to take a 120 gig self-powered external PC drive and in that case we are seeing those retail at anywhere from $160 to $200 for comparable laptop sized external hard drives.

I know it sounds expensive to a lot of consumers but we are comparable to those types of drives and also we have to go through a lot more testing and security.

It may not sit well with folks looking to upgrade their 360s, but his argument that an off the shelf drive from a hardware supplier is not exactly comparable to what Microsoft is selling has some merit. Then again, I'd have a hard time swallowing that price, too. More PR quoting at Next-Gen. Michael McWhertor

Hard Drive Price is Fair Says Microsoft [Next-Gen]

We posted it as a rumor this morning, based off of a Games Informer article, but the mag's editor has since contacted us to confirm that the story that is running in the latest Game Informer is no joke: A new Xbox 360 is arriving next month.

While Microsoft declined to comment on the story, sources tell us they plan to send out a press release next month, which is pretty much the only time they could, announcing the story.

According to the mag article, the new black Xbox 360 will arrive in late April and feature HDMI output, an HDMI cable and a 120GB harddrive all for $479. Unfortunately, there appears to be no talk of a 360 featuring a built-in HD-DVD drive. Perhaps that's down the line. There also seems to be room for a 360 with support for the IPTV announced at CES earlier this year.

Four SKUs, sounds like a bit much to me, but I thought two different Xbox 360s were out of line, so what do I know? Brian Crecente

Game Mag Says Black Xbox 360 is Coming [Kotaku]

But, as the tag suggests, we're calling it rumor for now. As Giz said, with CES just around the corner, we wouldn't be surprised to see the PSP v2 shown off alongside a PSP price drop. Michael McWhertor

Samsung 60GB Disk Destined for Next Sony PSP? [Gizmodo]
Sony PSP Movie Downloads Coming [Kotaku]

It all seems relatively painless, only taking a few minutes and simply erasing game saves, so why not drop another hundred bucks on tricking out your PS3?

Go on, you know you want that beefy 160GB serial ATA hard drive. Treat yourself! You deserve it. Michael McWhertor

Playstation 3 HDD Replacement Mini-Guide [Gamers Reports]

Is this the PS3 60GB HDD killer? Though there's been nothing official from Microsoft, reader Plaid Ninja snapped this photo at the Xbox Live event, and it shows 70 gigs of free hard drive space. A shoot in the dark, but we imagine these should be out soonish to take advantage of Microsoft's downloadable content service. Expect Sony to counter with even bigger hard drives until we end up with 300 GB HDDs. It's like the space race, but with game consoles. How dorky! Brian Ashcraft

Eds Note: Microsoft is officially saying they aren't doing one at the moment. And this could be a dev kit HDD. Stay tuned.

Bigger Drive [Plaid Ninja's Flickr]

It has to get bigger, you realize. There are rumors swirling that Microsoft is working on a 100GB hard drive. Website Game Inside is reporting that Microsoft in a recent Korean version of X06, the new HDD will be released in March in Korea and potentially elsewhere. This would be a big boast for the console's current 20GB hard drive and help it compete with the PLAYSTATION 3's 60GB one. Though, I've heard rumors from a reliable source that Sony is *considering* eventually releasing a PS3 with a 300GB hard drive. Nothing confirmed and no date on that one, except that it would be really, really expensive. Brian Ashcraft

New HDD? [TG Daily, Thanks Ron!]

Gamers are not waiting to see who becomes the Betamax of the blue-laser technology standoff.

Game consoles, driven by Sony's upcoming PlayStation 3 with Blu-ray technology, are expected to make up almost half of the $2 billion in revenue predicted for the blue-laser market in 2006, according to a new report from the Santa Clara Consulting Group.

This is a rather odd take on the situation. Gamers "aren't waiting" because they don't give a shit about Blu-Ray vs. HDD... or, if they do, it is an ancillary concern to the business of playing games on good hardware.

What's happening is that companies like Sony are forcing us to make a bundled purchase, against our will. We aren't waiting because there is no option outside of not buying a PS3 to make our own decision on the upcoming blue-laser format wars. Which is the reason guys like me won't be buying a PS3 for a while: even if I could afford a $600 console, I'm not going to spend a substantial portion of that on a technology I don't need. Florian Eckhardt

Gamers drive blue-laser market [CNet]

For folks that need more, there's the XSATA. The peripheral links 360 hard drives directly to PCs, enabling easy file transfer between the two and providing loads more space. Here's how it works: Attach the plug-and-play add on to the hard drive. Use the Xbox 360 file manager software to save games and store demos on your PC. To retrieve, just move them back. Sounds cool, but they really should've made the periph's light Microsoft green, not Sony blue.

More Here [Code Junkies]

This morning we posted about a rumor via gaming site My Xbox 360 regarding the new 360 getting a free 100 GB HDD. The rumor sprang from a Best Buy employee who works at a New Jersey retailer and added that the stores were having some big sale in early April as well. Crecente pointed out that because the tip falls so close to April Fool's Day, it was even harder to swallow.

Harder now that we've gotten official word from the good people at Microsoft. Casar from MSoft's Games Global Marketing team posted over at the Gamerscore Blog that the rumor is "not true" and "false." The official statement is:

We haven't announced any additional hard drives for the Xbox 360 beyond the 20 GB version available today.

Interestingly, in the comments section of that post, MSoft's John Porcaro writes that there are "no plans to announce anything, either." Continuing Porcaro states, "The Xbox 360 is modular, and of course there is the possibility that different hard drives will be available in the future. However, there are no current plans for such a device."

Several employees from Best Buy also contacted us, confirming that the rumor was merely that — a rumor. None of them had heard of anything, and nothing has been posted in Best Buy computer network.

There ya have it. Bigger HDD is possible, but not anytime soon.

Post Here [Gamerscore Blog]

Apparently, at the start of April, Premium packs will start shipping with 5x the HDD size of their predecessors. Cool for those who are about to buy a 360; very uncool for those who already picked theirs up.

They say the rumor comes from a Best Buy employee who works at a store in New Jersey. The employee adds that Best Buy is having some big sale in early April as well.

The fact that this tip is supposed to come true on April Fools Day doesn't lend it much credence. I'm leaning toward it being fake. I'd think any sort of free upgrade or price drop would be timed closer to the release of the PS3, not while the 360 is still selling out at the current price.

Rumor: 100GB HDD = Standard [My Xbox 360]