Flash memory maker M-Systems has been signed up by Microsoft to provide a high capacity memory unit for the next-generation Xbox console, adding weight to reports that the system will not include a hard drive.
M-Systems is best known for manufacturing USB flash drives which are small enough to attach to keyrings, but the company says that what it is manufacturing for Xbox 2 is a product that does not currently exist, and will be far higher capacity than the 8MB Xbox memory cards.
Sources within Microsoft and at development studios which have been briefed about the Xbox 2 specification have previously indicated that the company is seriously considering dropping the hard drive from the console in favour of high capacity solid state memory devices.
The deal with M-Systems fits perfectly with these reports, as it would suggest that an extremely large removable flash memory unit would replace the hard drive. Flash units of up to 512MB are already commonplace in pen and keyring devices, and it's possible that Microsoft could aim for an even larger unit for the Xbox 2 memory system.
Such a unit would be large enough to store hundreds, possibly thousands of save games, and even small-scale downloadable content such as new skins or models for multiplayer titles. However, the console would probably lose the ability to rip music CDs and run custom soundtracks - although Microsoft would probably prefer that you do that by playing music on your Xbox over a network link with a Windows XP Media Centre enabled PC anyway.
Microsoft will save significant amounts of money on the production cost of Xbox 2 by not including a hard drive, as well as allowing the case for the unit to be smaller and opening up a potential revenue stream from sales of flash memory units. The company will also be hoping that the lack of a hard drive will make Xbox 2 less attractive to hackers than its predecessor - whose hard drive has made it into a prime target for hackers who have turned the console into everything from a functional Linux system to a home media player, as well as enabling easy piracy of Xbox game titles.