According to a spokesperson for Microsoft, they have no plans to “release an Xbox 360 equipped with a next generation DVD player.” This statement was issued after the Japanese news agency Jiji said that Microsoft would ship an HD DVD-equipped 360 some time in 2006.
Microsoft’s statement seemingly contradicts what Bill Gates said in August, that Microsoft was “looking at whether future versions of Xbox 360 [would] incorporate an additional capacity of an HD-DVD player or something else.” Furthermore, the head of Xbox operations in Japan, Yoshihiro Maruyama, said that such a move was a possibility, but for enabling movie playback, and not video game storage. These statements are not incompatible; Gates and Maruyama both talked about possibilities and options for the future. The current statement simply said that they have no plans at the moment for it.
If Microsoft does release an Xbox 360 equipped with HD-DVD drive, there is no possible way that it would be used for gaming. Consider this; by the time the Xbox 360 is released with an HD-DVD drive, there will be millions of consumers with the current 360. So, if games are released on HD-DVD, then all of the current users will not be able to play the games. This will not happen. The only thing the HD-DVD drive could be used for, would be movie playback.