Flash memory maker M-Systems announced on Wednesday that it has signed a contract to provide storage products for future versions of the Xbox, bolstering speculation that Microsoft may ditch the game console's hard drive.

The idea of the move would be profiting from console sales which is harder when you bundle expensive components. Although this comes as pure speculation, in my opinion this wouldn't be a smart move from Microsoft given the on-going trend of converging game consoles with 'media centers', that is unless they plan to offer various versions of the console, with or without a hard drive.

What huge mistake this will be. What about all the downloadble content from the current xbox? Aren't there games out now that need the HD? Maybe they'll end up canning backwards compatibility too. Then it would make sense...

The storage medium itself is totally irrelevant to software. The OS and drivers provide the storage device interface to software and it doesn't matter whether the bits themselves are on a HD, in flash memory or being written down by elderly ladies in rocking chairs. Things from the current console won't even notice they are not living on spinning platters but on a layer of silicon.