[Update: Sounds like Microsoft still isn't having any of this "Blu-ray on Xbox 360" nonsense, despite the ever-churning rumor mill's insistence to the contrary. In a prepared statement, Microsoft stated (rather unequivocally we must say), "No. Lite-On is not manufacturing Blu-ray drives for Xbox 360." Speculation over? Something tells us that's unlikely.]

If you believe yesterday's rumor from Digitimes that Microsft is looking to integrate a Blu-ray drive into future revisions of the Xbox 360 console, then you'll want to hear their followup: their source claims that "Sony, as a main global producer of BD-ROM pick-up heads, may decide to combat the market competition by selectively reducing the supply of key BD-ROM components to OEM makers partnering with Microsoft on the new Xbox 360 drives."

What does this mean? Since the BD-ROM drives are roughly $95-100 "according to industry sources," and since the current DVD-ROM drives in the Xbox 360 are only $18-20, Microsoft would ostensibly be selling the console at a loss or risk selling a Blu-ray equipped 360 for more than a PlayStation 3. (Here, we'll do the math for you: $350 Xbox 360 Pro + $80 price delta > $400 PS3). So what happens if Sony jacks prices or withholds components, making that margin even less palatable to Microsoft? We're really not sure ... competition is always good for consumers, but Sony controlling the means of production is certainly an x-factor. Oh yeah, that is if Blu-ray is coming to Xbox 360 at all.

[Via Engadget]

This article was originally published on Joystiq.

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