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The Xbox 360 created an environment where gamers needed a hard drive in order to download games.  The next Xbox will still need a hard drive in some form to handle game installs and things of that nature, but putting Xbox Live Arcade games up in the cloud may be a better option for Microsoft to help use the power of Xbox Live to grow its platforms.

 

So there is a hard drive, don't report it as if there is no hdd. Sensational headline to get extra clicks.