Microsoft has adopted its usual silence amid rumours it is making an Xbox 360 with a built in HD-DVD drive.
The kerfuffle was caused by a senior Toshiba suit in Singapore, who apparently told Australian technology site SmartHouse that his company was working on the new hardware.
"An Xbox with a built in HD-DVD drive is critical. They and we are working on it," said the Toshiba spokesperson. "It also has to be more than a gaming machine. Microsoft recognise [sic] this. A version of the device may also be sold under the Toshiba brand name."
According to SmartHouse the new 360 will join the "entertainment hub" market with vast wireless networking capability as well as 1080p playback. There is also talk of an HD TV tuner, Electronic Program Guide (EPG) and docking port for an MP3 player like a Zune.
The new console will apparently be released in late 2008, or at the Las Vegas CES show in January 2009.
Toshiba owns the HD-DVD patent and recently shook hands with Sony to manufacture Cell processors, despite the PS3 being a flag-waver for rival Blu-ray technology.
Microsoft recently announced a new Christmas deal for the HD-DVD add-on unit, where every new purchase would receive five free films. The separate hardware currently sells for around GBP 115.