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JaggedSac said:
Once again, let me reiterate, these are the exact same arguments that were said about mp3 players. Fiber optics are going to be more of a jump than 56k to 1.5 mbps. They run at about 100mbps. That is amazing. You theoretically wouldn't need a hard drive. Just a boat load of ram(enough for a good sized buffer) and a good bit of fast cache. You could just stream the game whenever you wanted to play. 100mbps is faster than an optic drive reads. You guys are limiting your imagination here. Theoretically this would not be limited to games, any digital content; software, audio, video, anything 1's and 0's could easily be done on a system with networking that fast. Operating system could even be streamed to the system. Today's desktops are going to be the way of the past, Google knows this, Microsoft knows this.

 MP3 is a compression standard that allows you to crunch already small quantites of audio data into 1/10th the space.  Games have been growing by leaps and bounds in terms of data.  They get like 5x bigger with every generation.  A 100% digital delivery service would only be viable if the price of gas goes so high that its no longer economically efficient to produce and deliver goods via physical transport.  ...I suppose that's possible, but I don't think your own reasoning really holds up, from a technical standpoint.

 "Never underestimate the bandwidth of a station-wagon full of backup tapes, hurtling down the highway at 55 mph" -- a quote from a classic text on networking. 

Backbone network speeds are not increasing at the rates you imagine them to -- just the delivery point speeds are, really.  M$ would have to commit themselves to selling cheap mini titles to pull this off anytime soon, unless the world enters a really major energy crisis first -- and then you're probably not going to be wanting a new, power hungry XBox anyhow.  You're gonna want some new farming tools, to help feed your family instead. =)