Microsoft plans ahead, to a time when traditional DVD isn't big enough to contain movies and video games, mooting a possible upgrade to the not-even-out-yet Xbox 360.

An awkwardly hot potato for Microsoft, this. Just ahead of the ridiculously important launch of Xbox 360, Bill Gates himself has been forced into hinting that an upgraded Xbox 360 may be needed to cope with the new disc formats on the horizon.

"The initial shipments of Xbox 360 will be based on today's DVD format," says the world's richest geek, before adding "we are looking at whether future versions of Xbox 360 will incorporate an additional capability of an HD DVD player or something else."

With the high-capacity HD DVD format set to go head-to-head with Sony's Blu Ray discs for dominace of the home cinema market over the next few years, having a console that can play movies - as Sony proved with PS2 - is going to be crucial in cracking the mass market Microsoft so desperately wants. You can see from this morning's news how Microsoft are getting into bed with Toshiba to make this happen."