I writing this down has "Rumour" because it hasn't official been announced, and I can't find any other sources backing up these claims.

http://www.xbox-scene.com/xbox1data/sep/EkkZlFAyyZZXEKjatA.php

Stand-out additions include the fact that "the onboard flash chip has grown from 16MB to 256MB. Microsoft included internal memory storage, so the Arcade SKU now ships without (external) Memory Unit and the new NXE dash will install fully on the flashchip (rather than requiring a HDD or external MU). But the internal memory can also be used to store gamesave data, XBLA games, videos or whatever."

So yes, the new arcades will be released without an external memory unit.. since it will be an internal memory flash chip!!

This will help MS lower cost and release a $149 SKU in march!!!  <-- just kidding about the SKU...

Hmm I think people prefer external can be wrong though.

I read that earlier and wondered why they didn't do that from the start with all models, even if it was only 16mb to hold a single profile with a few game saves.

Mistershine - I think they did with the 16MB (as per the article), but the 16MB wasn't enough to store anything viable outside the OS.

 Fair doos.

Couldn't they have budgeted 512mb to at least match the Wii?

Also this means they have a lot of confidence on the reliability of the Jasper, since such a solution could mean loss of data when sending it to MS for repairs.

good news. Now the Arcade can install NXE with memory to spare for saves and such.

ALso im sure it cost cuts after taking out a bulky external memory unit.

$150 Arcade come holiday 09? thats what im predicting.

Most likely we'll see a $149.99 or $169.99 SKU by Christmas 09. The X360 should have launched the new Slim/520 model by then with the intergrated 65nm CPU/GPU. This should allow for the major overhaul, with a price reduction in tandem.

Its better external as you can bring you game data to friends house if you wish to.

I prefer an external memory unit also. To store my profile, Netflix account and a couple of saved games.