New Xbox 360 update incompatible with some models, MS offering replacements [update]

Microsoft has confirmed that some Xbox 360 consoles weren't happy with a recent firmware update upcoming, mandatory firmware update. The console manufacturer will replace consoles that have become unable to read retail game discs with a new Xbox 360 S with 250 GB hard drive.

"Following a recent update to our system software, we have become aware of an issue that is preventing a very small number of Xbox 360 owners from playing retail game discs," a Microsoft statement reads. "This issue manifests itself a as a unique 'disc unreadable' or 'disc unsupported' error on the screen and is unrelated to our recent public beta (alteration from original Eurogamer statement). We are also able to detect this issue over Xbox Live and are proactively reaching out to customers that may be impacted to replace their console."

The firmware update implements new anti-piracy measures (along with a 1GB bump in disc storage capacity) that apparently don't play nice with certain DVE drives. Given that the Xbox 360 has had several revisions to its guts over the years, this is the reason why only certain models will be affected.

We've contacted Microsoft to find out what North American consumers should do if their console is incompatible with the update. European consumers have been told to go to Microsoft's general support page.

Update: Altered text above with new information. Microsoft's official statement can be found after the break.

Microsoft tells Joystiq that the issue is "not tied to the pending update that has been in beta" and that information given earlier today to Europe was "incorrect." They also inform us that the problem isn't region specific. The official statement: