Again, Microsoft stomps out Xbox 360 Blu-ray rumors

Microsoft has again quashed rumors that it will ship a Blu-ray drive in or for the Xbox 360. This time, the speculation was fanned by DigiTimes, which quoted industry sources who claimed that manufacturers had been chosen to start production of the drives.

According to the report in DigiTimes, which has had a shaky past in predicting companies' future moves, Taiwan's Lite-On IT was asked to participate in the production of the Blu-ray drives for Microsoft.

But production of such drives is met with a fundamental problem: price. The cost to build a Blu-ray drive, estimated to be as high as $95 to $100, is far higher than the cost of the current DVD drive in the Xbox 360, thought to be between $18-20.

If it were to equip the console with Blu-ray drives, Microsoft would be stuck selling the Xbox 360 at a loss once again, after only now being able to pull a small profit.

DigiTimes said that Sony could play hardball in preventing Microsoft from gaining too much from adding Blu-ray capabilities. As the only producer of BD-ROM pick-up heads, it could reduce the supply of such components to those working with its competitors in order to stem competition.

Microsoft has reportedly addressed this report by saying "Lite-On is not manufacturing Blu-ray drives for the Xbox 360." The company emphasizes that right now its focus is on digital movie and TV downloads through the Xbox Live Marketplace.