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Squilliam said:
What physical medium in say a couple of years time? Hmm, how about digital distribution and catridges!

Physically an optical drive adds about $100 to the baseline cost of a console when you factor in the required HDD, Ram, packaging and optical drive itself. So much extra stuff has to be added to a console to make up for the deficiencies of the optical drive format. My guess for the next generation they will keep the console simple.

Xbox next Arcade = 10GB of fast flash storage + cartridge media.
Xbox next Premium = 10GB of fast storage + cartridge media + HDD
Xbox next Elite = same as above with optical drive for BC.

The transition to 450mm wafers is upon us! Flash is just getting cheaper.

I remember reading that they are working 1TB and 2TB SD cards.  If they are cheap enough, I could see Microsoft going with that, and a cheap drive to be able to read DVDs, etc...  Microsoft wants to get into the home.  They will need to go higher than 10GB for storage, because 8GB or so is getting maxed out.

If Microsoft does go SD approach, they could then lead the way to eventually having a portable system that plays the same games.