A supposed Microsoft document has been leaked to the public suggesting that the 360 might get some external USB drive support. As stated in the title here, though, it’s not exactly what you might have dreamt. Yes, the 360 would now recognize and be able to appropriately format an external USB drive to store 360 files, but that storage is capped at 16GB. That’s smaller than the original 360 drive from half a decade ago.

It will be possible to install games to your USB drive provided this rumor is true. Of course, you’ll still need the disc in drive for authentication, so you’re not exactly saving a ton of time by this method.

The move is obviously aimed at getting away from Memory Unit storage, especially for arcade consoles. Microsoft is probably still making too much money off those 120GB hard drives to actually allow anyone to hook up their drive of choice, so this is the compromise. You get 16GB of storage, 32 if you connect more than one drive but two is the max. Connect a third and you’ll only see the first two.

The other thing this gives Microsoft is the flexibility to do away with those Memory Unit slots to help reduce the 360’s form factor. Will we see an Xbox 360 slim by the time Natal launches?

Source: Joystiq