XBOX-HQ.COM - Xbox Nextpod ?

RUMOR: The Xbox Next will come with an external, palm-sized hard drive which can be used like the Apple iPod.
Source: Tech-toy enthusiast site http://www.engadget.com
The official story: No comment. What we heard: Besides being a juicy rumor, this one is also an amusing story. Apparently, Engadget was contacted by a snowboarder who claims he had an interesting après-shred chat with none other than Microsoft's J Allard in Whistler, British Columbia. According to the snowboarder, the newly dubbed Chief XNA Architect got quite gregarious after several rounds of Red Bull and Tequila concoctions, called "Hey Zeuses," and started gabbing about the Xbox Next. Allard supposedly said Microsoft was planning to sell its next-gen console's hard drive separately, have it be self-powered, and infuse it with MP3 and WMA playback functionality. He allegedly boasted it would be an "iPod killer," as Microsoft would sell it at a loss for a mere $100. While optional HDDs are undesirable from a development perspective (just look at all those PS2 HDD-compatible games!), the thought of a $100 handheld 40GB MP3 player and game storage device sounds like a geek's wet dream. However, a source at Microsoft laughed the story off. "Any story told over 'Hey Zeuses' is most definitely a rumor," said the source. Bogus or not bogus?: We really hope it's not bogus.

News Source: http://www.gamespot.com