According to this report, Microsoft will be selling a Blu-Ray enabled XBox360 console sometime in the 3rd quarter of 2008.

(image not the actual unit)
Quote:
After months of rumors and denials, the XBOX 360 with a Blu-ray disc drive is due to be manufactured soon and shipped in Q3 of 2008. Pegatron Technology, an OEM subsidiary of Asustek Computer, is reported to have received the winning order from Microsoft for a Blu-ray equipped XBOX 360.
Earlier reports cited Lite-On as the company with the privilege of building the new console for Microsoft. Lite-On is also currently one of the suppliers of the internal DVD drive fro the XBOX 360.
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Ok, well now this sort of screws up my plans on buying a PS3. One major reason I wanted one was for the Blu-Ray player. I really liked my old 360 and the Live platform. Hmmmm...
[Update]: Or maybe
the XBox isn't getting a fancy new Blu-Ray drive...
Quote:
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"As we have stated, we have no plans to introduce a Blu-ray drive for Xbox 360," said a Microsoft official in an email to GamePro on Monday. "Games are what drive consumers to purchase game consoles, and we remain focused on providing the largest library of blockbuster games available."
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This could simply be Microsoft's PR attempt at stopping anyone from buying the current retail stock of 360's, so don't believe it as gospel. I guess only time will tell...