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Quote:
"We've said [to developers], 'Hey look, don't bank on the hard drive always being there. There may be a scenario in the future where we don't want to have a hard drive, and in that case, we have to make sure that the games that you've created are accessible to the broadest possible audience.'"
-- J Allard, Xbox executive, to Game Informer in August 2005

How times have changed. Box art proposals for Call of Duty 4: Modern Warfare with a "storage required" sticker and a recent story rumor mongering that upcoming Xbox 360 titles will specifically require gamers to own a hard drive have created a mess of confusion around Microsoft. The question is easy: will Xbox 360 games eventually require the user to own a hard drive?

Final Fantasy XI already does (unsurprising, since it's an MMORPG and those have traditionally required hard drives), and last year's European title Football Manager 2006 did because Sega claimed it was the only way to handle the large save files in the game. But, are we on the verge of seeing hard drive required labels on lots of Xbox 360 titles? Currently, Microsoft (and retailers) are still selling the Core SKU -- even if there are reports of an eventual discontinuation.

the article gets a lot more interesting towards the end.
http://www.1up.com/do/newsStory?cId=3161805

here's my take on this:

cliffs: i think some games will begin requiring the HDD, core pack isnt going anywhere, and my condolences for the core users.

although i like the fact that MS gives its customers a choice on which SKU to get, the core just isnt a good value for new users. hear me out, when people ask me which SKU to get, i usually tell them not to get the core. every game requires some sort of storage medium. how the heck will people save their gaming progress? playing games like oblivion without a HDD or memory card is ridiculous and a waste of time. whether it's the HDD or memory card. the way MS has their peripherals and even their SKU's, it's pretty clear that they want you to get the premium. the recent announcement of the price drops further proves my point. the premium got a $50 drop while the core got a $20 drop.

will the core be phased out? i dont think so. what i think will happen is the larger online retailers will continue to carry it while the brick and mortar type will either stop carrying them or stock them in very limited quantities.

so who's gonna buy the core pack? existing 360 users who have either been banned from xbl. when a person is banned from xbl, their gamertag and 360's serial number are banned. the most common ways to get banned are using a chipped/hacked console on live, and peer feedback. the latter is extremely difficult to be banned from. ok, so when they buy a core pack, theyre not spending extra money for items that do not need replacing. this also benefits people who would rather buy a new console than have their out-of-warranty ones repaired. although repair costs are cheaper, you dont really have the reassurance that the issue wont pop up again after the even smaller warranty expires.

oh snap, going back to the HDD thing... i think more developers will start using the HDD in their games. they will have to, and after reading the article, MS knows it too if they want to remain competitive with sony.

i'll stop there. sorry for the long post. lol

to be honest this was only a matter of time, There is a huge amount of space being ignored atm and it's very easy to dump some data on there to begin with and have a much quicker game

Sony got the game install feature right.
I still can't work out why Microsoft released those Core consoles in the first place. No one I know has ever bought one. I expect more HDD-only games will be appearing soon.
This is good news, in essence, it not only helps the gameplay, it can also help the DVD9 storage woes. If using high density compression, they could have it massively decompress on to the drive at the start of the game, and theoretically, have like 5-6 GB of extra accessible game data.
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