http://www.mcvuk.com/news/read/exclusive-no-disc-drive-for-next-xbox/092534 Pinch of salt time, but the more I think about it the more it makes sense for many reasons (Richard prediction mode engaged): MS will never dump the retail market. The majority of sales is still retail driven and the internet is not fast enough or capped for many people. DVDs provide a fixed size and MS would never pay a license to Sony for Blu-ray. Flash costs have dropped dramatically and Flash can be random read faster than disc, so a) less time to install games and b) can mix installed + flash cart required = form of DRM. You can AES256 encrypt the Flash drive, and modern CPUs have realtime decryption built-in. Breaking AES will take years and help kill piracy. The cost of a card reader is about 10p. The cost of an optical drive = $10. The size of a card reader = 20x20x5mm. The optical drive is the biggest thing in a 360. Card reader = silent and soild state. Optical drives are one of the biggest cause of failures in the 360 - especially at launch. They're also noisier than the fans. Publishers can make games ANY SIZE. You've got a 60GB game? Sure thing. No multiple disc BS. The cost of flash is down to the publisher to swallow but as the cost of flash comes down and the volume goes up (economies of scale are astronomically above NES/SNES/N64/Genesis cartridges = much lower cost) so does the price come down. Maybe include a writeable-once flash chip that burns on the Xbox account or console number, so no sharing or 2nd hand market. (It's doable).