Microsoft Kills Xbox 360's HD DVD Drive

Days after Toshiba formally pulled the plug on HD DVD, Microsoft said it will discontinue an external Xbox 360 drive that supports the high-definition movie format.

Microsoft will "no longer manufacture new HD DVD players for the Xbox 360, but we will continue to provide standard product and warranty support for all Xbox 360 HD DVD Players in the market," company officials said in a blog post Saturday.

Microsoft had been selling an HD DVD player as a $129 add-on for the Xbox 360.

Toshiba, which developed HD DVD, last week confirmed speculation that it would nix the format. The move follows decisions by virtually all major Hollywood studios to throw their weight behind Sony's rival Blu-ray high-definition format.

The death of HD DVD puts Microsoft in a quandary. Sony's Playstation 3 console features a built-in Blu-ray player. With HD DVD no longer viable, Microsoft needs to find an alternate high-definition format for the Xbox.

The company could itself move to Blu-ray. More likely, however, is that it will reject its rival's technology and focus instead on offering high-definition downloads through its Xbox Live online content service.

Microsoft already sells a limited selection of HD television program and movie downloads on Xbox Live, which boasts more than 10 million members.

In the meantime, Microsoft says that HD DVD's discontinuation won't hurt Xbox 360 sales -- insisting that it's games, and not movies, that dictate console sales.

"We do not believe the recent reports about HD DVD will have any material impact on the Xbox 360 platform or our position in the marketplace," the company said. Microsoft shipped 4.3 million Xbox 360 systems in the three months ended Dec. 31, compared with 4.4 million systems during the same period in 2006 -- a decline of 2.3%.