Joystiq is reporting some rather exciting news about a potentially upcoming Xbox firmware update. According to some documentation received by the venerable blog and supposedly confirmed by two outside sources, USB Mass Storage Device support for the Xbox 360 may soon be more than mere pipe dreams.
The firmware update, slated for this later this spring, will allow for USB devices to store the whole slew of content available for the storage-deprived Xbox: Xbox Live Arcade games, Games on Demand, DLC, and even install-based disc games. Once the drive is formatted, it acts just like any other memory unit attached to the system and is indiscriminate to the data that can be saved on it.
There are caveats, however. For some reason (likely to curtail encroaching onto the ridiculously-overpriced-hard-drive market), the USB storage is limited only to 16GB, with 512 MB reserved for the system partition. The machine will still read from/save to devices of greater storage capacity, but only 16GB will be available for Xbox use. Additionally, only 2 devices will be supported simultaneously, meaning that an absolute max of 32 GB will be supported at any given point in time.
Limited thought it may be, I, for one, am still excited about this. Anything that can save me from buying the $120 hard drives is a good thing.
Check Joystiq for the full info and some Dashboard screenshots of the USB format process.