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Just found this article on gamepro.

Company says it will not be using Sony technology in its "game console."

"As we have stated, we have no plans to introduce a Blu-ray drive for Xbox 360," said a Microsoft official in an email to GamePro on Monday. "Games are what drive consumers to purchase game consoles, and we remain focused on providing the largest library of blockbuster games available."

The statement comes amid persistent reports that Microsoft will release a Blu-ray drive for Xbox 360 given the discontinuation of the console's now defunct HD DVD drive.

On Friday, the Economic Daily News (via Digitimes) reported that Pegatron Technology has secured an order from Microsoft to manufacture Xbox 360 models with internal Blu-ray drives for release this fall.