File this one under: no-brainer. Microsoft will attempt to compete with the PlayStation 3 by releasing the Xbox 360 Ultimate with an onboard HD DVD drive, according to Stuff magazine.
Following the release of the recent Xbox 360 Elite, the device is rumoured to feature a 1080p HDMI output, onboard Wi-Fi, HD audio output, smaller 65nm architecture and quieter operation.
Stuff also claims that the new Xbox will connect to the upcoming Xbox with Microsoft Mediaroom (IPTV) service -- which will be unlikely to come to Australia, if past experiences with Apple TV are any indication.
The article doesn't quote any sources, and is probably more of a wish list than an actual product (the original rumour emerged in August 2007), but Stuff claims the device will be available in Q3 2008. If any announcement will be made, it is likely to be during Bill Gates' keynote on Sunday at CES in Las Vegas.
Thecould be the device that will finally win the , and Microsoft won't rest on its laurels considering it has a stake in the HD DVD format.