Now they're saying the Xbox 720 won't have an optical drive. Don't you believe it!

Have you heard the lastest Xbox 720 rumor? No optical disk drive! This one comes from MCV and, surprise, they don't list their source. They do mention the source also told them that the news was delivered under what they describe as "the strictest NDA" that the source had ever encountered. And which obviously had very little impact on the source, since they immediately turned around and broke said NDA.

How can you trust someone that breaks a confidence so easily? Well in this case, you can't, because this rumor makes no sense whatsoever.

Instead of optical disks, the rumor-monger says games will be distributed via some kind of solid state media as well as digitally. Whether that media is a standard SD card or something more proprietary, the source didn't know.

And who knows, maybe Microsoft is opting to go with card-based media. It worked for the TurboGrafx-16, after all!

But even if this is true, the Xbox 720 will still have a DVD or Blu-ray drive, and probably the latter. Why?

Well look at what Microsoft has been doing with the Xbox 360. Sure it's a gaming system, but they want it to be more than that. It also delivers HBO Go and Netflix and Hulu and last.fm and YouTube and so on and so forth, including playing your DVD movie collection. Most or all of these features you can also get via a smart Blu-ray players, connected TVs, Roku players, Tivos...again, the list goes on and on.

So why is Microsoft adding them to the Xbox 360? Because Microsoft wants you to use your Xbox for everything. They don't want you to have to worry about all those other devices: sell them all on Craigslist and enjoy a voice-controlled home entertainment center via Xbox 360 and Kinect. Why? Added value, for sure. But also don't forget the Xbox Dashboard includes ads, and ads mean revenue.

There's no reason to think that their policy will be any different with the Xbox 720, and in fact I suspect they'll be pushing this idea of "Xbox as universal set-top box" idea even harder in the next generation.

But if they yank out the optical drive, then all of us with DVD and Blu-ray collections will have to use something else to play the movies and TV shows we already own. And chances are, particularly in the case of Blu-ray players, that other device will offer some or all of the other services that Xbox offers (except for the game playing, of course). That's way too big a chink in the armor for Microsoft to move forward with it.

And then there's the whole question of backwards compatibility for our Xbox 360 games, too. Microsoft didn't put a lot of effort towards backwards compatibility with the Xbox 360 but the original Xbox wasn't nearly as firmly entrenched as the 360 is. I really think Microsoft needs the Xbox 720 to be able to play Xbox 360 games, and for that to happen, there needs to be a DVD drive.

So to recap the Xbox 720: Games on some kind of solid-state card? Maybe. They'd load faster but the cost of actually manufacturing them would be higher, so I'm not sure. But I'll defer to MCV's NDA-breaking source on this one. Blu-ray player? Probably. Blu-ray is catching on and Microsoft will want you to be able to play all your media on the Xbox 720. DVD player? Absolutely. There's no way Microsoft would launch a device that won't play our DVD collections.

As always, I have no inside sources, just a long history of being a gamer and watching the behavior of the companies who make the consoles and games that we love. Think I'm wrong? Let us know in the comments. I'm not infallible and would love to hear your counter-arguments!

Read more of Peter Smith's TechnoFile blog and follow the latest IT news at ITworld. Follow Peter on Twitter at @pasmith. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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