According to a recent story on Korean video game site Game Inside, Microsoft is working on a new hard drive for the Xbox 360 with a capacity of 100 GB, which could be used to store game saves, Xbox Live downloads, and media files.
The announcement came at the Korean version of X06, a Microsoft-specific event in the Eastern part of the world that has more of an international focus than other big events like TGS and E3, so it's unknown exactly to what markets outside of Korea this peripheral is headed, but it would be unusual for Microsoft not to eventually bring it over to the US. Reportedly, it will be making its global release in March in Korea and potentially other countries.
The premium Xbox 360 comes with an external hard drive of 20 GB. Comparatively, the premium packaged PS3 consoles, which will hit the US on 17 November, have 60 GB of out-of-the-box storage. The PS3, which doubles as a Blu-ray disc movie player, is the only next-generation video game console to have a built-in playback support for high-definition discs. With the Xbox 360's new 100 GB hard drive and upcoming, notably under-priced HD DVD add-on, it is clear that Microsoft is aiming to allow hardcore gamers a comparable experience to what the PS3 will offer.