Yesterday a spokesperson from Toshiba said that Microsoft would begin producing consoles with internal HD-DVD drives. Now Cesar Menedez writes on the official Xbox games blog:

Saw a few stories online about an Xbox 360 with a built-in HD DVD drive: not true. We have no plans to release an Xbox 360 with an internal HD DVD. What we showcased at E3 was an external HD DVD drive, and we’re sticking with that.

An internal HD-DVD drive at this point would drive the price on the Xbox360 through the roof. The HD-DVD add-on is believed to cost around $200, as we reported last month. No official release date has been set on the exteral drive.

Via Kotaku