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This is definitely not the first time anyone’s heard this rumor, but Smarthouse is reporting that Microsoft and Toshiba are working together on an updated Xbox 360 with a built in HD DVD drive. But wait that’s not it, there are some other crazier aspects. Smarthouse also claims that the new box will be Toshiba-branded and have dual HDTV tuner, electronic program guide capabilities, built in wireless networking, and have an “Mp3 player” dock, which you can imagine would probably be for the Zune. So, get ready to hear a lot about this rumor in the weeks to come.

[Via Joystiq]

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