Even though Microsoft Corp. is reportedly planning not to build-in HD DVD drive into its Xbox 360 game machine, the firm may still sell bundles consisting of external HD DVD player and the console, media reports suggest. It is not completely clear whether the decision is really cost-efficient, however, it indisputably provides Microsoft some production flexibility.

Microsoft will reportedly sell external HD DVD drive for as much as Ј199 (approximately Ђ292, $371), which is substantially higher price-tag than expected originally. However, Microsoft is planning to bundle premium Xbox 360 game console and external HD DVD player “for under Ј400” (about Ђ586, $746), reports GamesIndustry.biz web-site. The price of the bundle could even be lower than that of PlayStation 3, which supports Blu-ray disc player.

Earlier it was reported that Microsoft would sell the external HD DVD drive for $199. However, Microsoft is quoted as indicating that due to shortages of blue-laser diodes, Microsoft is reluctant to launch a hardware piece on the markets, which does not have enough movies, particularly, in Asia. Nevertheless, even though that there are virtually no HD DVD or Blu-ray disc movies in the European Union as well, the information reported above means that Microsoft will still make the external HD DVD drive for the Xbox 360 available in the EU.

Microsoft is expected to launch the add-on HD DVD drive for the Xbox 360 game console by Christmas for $200 (which is more than likely to transform into $199 when retailed), according to an earlier news-story. The drive will enable Xbox 360 owners to play high definition movies on HD DVDs, a standard that battles against Blu-ray for becoming the successor of DVD. The drive will feature H.264 video decoder from ATI Technologies, who developed visual processing unit for the gaming machine. It is projected that the add-on drive will allow Xbox 360 to compete head-to-head with Sony’s PlayStation 3 which offers rival format Blu-ray playback.

Sony recently decided to postpone the release of its PlayStation 3 game console in the EU due to production problems with Blu-ray drives and also cut the volumes to be immediately available at launch to 500 thousand. This may allow Microsoft to benefit, it manages to release enough external HD DVD drives for the Xbox 360.