Yes it does. Its the same reason why the proprietary PS3 component cables are expensive.

if the price bothers you then you can use this:

$49.99 from amazon and the buyers there tell you how to get it to work with the 360

http://www.amazon.com/Xbox-Wireless-Network-Adapter-MN740/dp/B00005QBX9/ref=sr_1_2?ie=UTF8&s=electronics&qid=1230517521&sr=8-2

Yea that needs to go down and the expense of their HDDs which are just outrageous.

Isn't that an original XBOX peripheral?  Looks familiar, that's why I am asking...

Not really. $100 for a 60GB HDD from retail is pretty reasonable if you consider how easy it is to install them.

wasnt it $120 about a year ago ?

Your kidding me right.  Like are those really that much different from ones on the PC because ones that fit on PC are like $70 for 500 gbs.  My brother just bought one recently actually.

Laptop drive remember!

So its reasonable that Nintendo sells $100 worth of Hardware for $250 retail?

Its also reasonable that computer companies charge you more for a system than you can build yourself?

But its unreasonable that Microsoft gives people an easy way to upgrade their HDD without tools (Who has a precision screw-driver set really!) In an external casing.

Well someone is in a defensive mood. I'm sure many companies overprice for thing including Nintendo with the Wii. Though that it ticked you off there you must recognize how vastly overpriced the 360 HDDs. Well that's all I needed to hear.

So yea MS bring the price down of those Harddrives because they are too damn expensive. I mean at least $50 for the 60 GB Harddrive so at least your cheaper than the 500 GB ones.

A 2.5" 500gb drive does not retail for $70.00, they are around $120.00 on the low end, and $150.00 on the high end.