I suspect we will see Microsoft's next console as early as Holiday 2009 or latest Holidays 2010.  I'm just curious what people think Microsoft will do for a storage medium next-gen.  Clearly blu-ray has won but will it be the standard for all types of data?  Perhaps some new disc-based format other than blu-ray?  Holographic Versatile won't be cost-effective in time for 2010 for certain. Maybe something else entirely?  I, for one, would love to see a way to get rid of spinning disk technologies -- except for a hard drive...

If MS does choose blu-ray going forward, it would really be a slap in the face as they have to basically admit Sony was right all along...  I can't imagine that MS won't do everything possible to find an alternative...

By that point Solid State hard drives should be much cheaper to produce and pretty damn fast. But that is IF they decide to go an all download route, which by MS's next console, could be potential suicide :x If Blu-disc takes off well enough, I think they'll probably just end up taking that path, it wouldn't be much of a slap in the face, because they're currently using "old" technology which happens to be pretty damn cheap, next gen, blu-ray tech will be cheap as well and at the very least it would fit into their budget.

I think they will go with the option that is most cost effective and user friendly rather than going for the "out of spite" approach to business. I agree with ChronoTriggerJm :) that if Blu-ray is in anyway dominate or even widely adopted by the next MS launch, then they will go that route as it is the most logical, non-spite driven, business decision.

I think they'll move away from discs entirely and thier next console will have either a HDD or a SSD.

I could almost agree with that Nintendoman, but adopting an ONLY download service would be suicide. Market adoption just isn't that fast, and they would be swallowed whole by the accessibility of the other consoles :/ Storage media is for everyone, and in it'self it creates business for common shops and it's plenty awesome for advertising. Going the download only route by their next console would F*ck them over wicked style.

Mostlikely Blu-Ray or their own proprietary format (a 'la GameCube). I do think it will be able to playboth Blu-Rays and HD-DVDs, though.

Blu ray if it becomes as popular as DVD is right now.

 Why would it have compatibility with a legacy format that lasted 2 years in the wild and which will have been dead for at least 1 year before the launch of the next MS console? 

I think they will perfect Procedural Generation, and continue to use DVD.

This is a no-brainer... Blu-ray. MS wants their unit to be a multimedia hub... That won't happen if they don't use a mainstream optical format and DVD won't cut it next generation.

Solid state will still be too expensive to use for storage, especially at the sizes MS will need for the console (200+ GB). They'll want a nice mix of cost vs. size and Blu-ray and traditional HDDs will offer that in large spades 2010.

Shit, we might even see them use one of Toshiba's 1.8" drives (used in iPod Classics) if the price is right. That would definitely clear them some room to launch a small console (along with a laptop BD-ROM drive) at a sub-300 dollar price point.