Rumor: Xbox 360 Upgrade Coming With Bundled HD DVD and Larger Hard Drive

Toshiba insiders report that Microsoft's developing a new Xbox 360 with a "new" HD DVD drive (unclear if it's on-board) and a larger hard drive, possibly for any IPTV or DVR efforts coming soon. Also, there's been features thrown around that are unlikely to make it into the final product, such as dual HDTV tuners (OMG), a docking port for MP3 players (probably the Zune), and much quieter drives and fans. The reason for bundling an HD DVD drive? Market penetration for the format. Blu-ray was able to sneak millions of players into homes via the PS3, and now with the HD DVD format losing in terms of total players, Toshiba wants to do the same thing. [SmartHouse via Kotaku]