I hope for MS, that they learnt that you should not listen to what your customers are asking to satisfy them, as they don't know themselves what they want.
Like for women, they should look at their customers' behaviour to try to discover what they really want.
This expanding disk size looks like a hugely bad idea.
Of course, the movies DLC was a stupid idea already, as the XB360 is supposed to be a console, not a PVR. But no need to go on the stupidity path by adding a bigger HDD, and yet another SKU.
XB360 is now seen as unreliable in several ways. All these SKU go against the idea that a console is reliable. Remember the first SKU ? Those that bought them were screwed in every way. It also shows that the MS had no clear strategy on what to make with their console from the start. That doesn't convey an idea of a reliable company for a console.

So my take is they shouldn't do this. I'm already thinking they run scared in pacnic mode since some months, now that would only be a validation to me, and surely countless customers could feel it.

Does the author of that article really think MS goes on pricegrabber every year and order 10 million hard drives?  Seriously...

Microsoft makes a contract with a large hard drive manufactuerer to buy millions of drives at a time.  Millions.  They don't pay the price normal people pay, and they don't have to worry about discontinued product.  The manufacturer will make drives *just for* MS if they're buying millions at a time.

And smaller drives, in thoses cases, can still be cheaper.  There may not be any price difference among designs that have the same number of platters (say, 20GB and 60GB drives), but there will be a price difference between the multi-platter drives and the single platter drives.  Not only is there a price difference, but there is also a heat difference and a failure rate difference.

It might make sense for MS to switch to flash-based drives for the Premium, since it's only 20GB, but it would possibly make the Elite less attractive since the Premium would have a faster drive then.

Absolutely. The price Microsoft pays will be proportional to the manufacturing costs, as the economies of scale that cause 250GB to be apparently cheaper than 120GB don't have much of an effect when you make orders on Microsoft's scale.

I think you are expecting too much from MS. This is the same company which released a console sku with no HDD.

You beat me to the punch on the price arguement but otherwise the op is right. I think that they get a single platter drive of whatever the mainstream platter size is. My guess is 20gb platters are going away and they will now get 60gb platter based harddrives.

The actual cost difference is small though. Maybe a couple bucks. The heat issue is not relevant It is like worring about if you should put a 20 watt or 40 watt bulb in your kitchen when you have the oven on and door open. Reliability maybe...

 I think 60gb for premium and 300GB for the elite. I think the elite in particular is looking short on value.

yeap I agree.... I would go like that.... 20 gb for the arcade so they can DL sometime some demo or a movie, 120 gb for the premium.. you can already stock a reasonable amount of data.... and a really big one for the elite like between 300 and 500 gb... for those who want to stock everything directly on their XBox... i.e. photos music, maybe even games as stated by some or movies if you can keep them longer in the future...

and of course expend their service offer on XBL.... but that I'm pretty confident that it is one of their main concern already since XB the first :)

The "satisfy your userbase" part was funny.

Launching one console without a HDD and the other with a 20GB HDD in 2005 was stupid IMO.

For little additional cost, they could have created one SKU with a 40GB HDD. Then we wouldn't be in this situation and I wouldn't constantly be deleting stuff off my 360 to clear space.

they need a bigger hdd. on the 20gb one, you only control 60 or so % of your hard ddrive

i say at least 320 gb if they want DLC