Financial Times reports that "Sony is in talks with console rival Microsoft about offering a Blu-ray drive for the Xbox 360." This is the first time we've heard any concrete details regarding such a move, though Microsoft has long suggested that adopting Blu-ray was a possibility. As early as CES 2006, in January of that year, Peter Moore said that Microsoft could release an external Blu-ray player if that format proved victorious (which it did); at CES this year, Microsoft's Albert Penello said adopting Blu-ray was "something [they'll] have to consider" if "consumer choice" demands it.
So when Sony Electronics US president Stan Glasgow says Sony and Microsoft are chatting Blu-ray, it's really not a surprise but an update. That said, Mr. Glasgow also mentioned talks with Apple, who has yet to offer a Blu-ray drive in any of its products and is (like Microsoft) focusing on digital downloadable content. We doubt Microsoft would release an internal Blu-ray drive, but an external drive seems like a safe bet in keeping with their HD media strategy.