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Rumours were circulating today that Microsoft is set to dump HD DVD and bring out a Blu ray Xbox 360 by as early as May 2008. The move will allow the Company to go head to head with the Sony PS3 gaming console which has been credited with being one of the main reasons that retailers have preferred Blu-ray over Toshiba’s HD DVD.

Insiders at Microsoft in the USA have told SmartHouse that Microsoft has already configured a standalone Blu-ray player that can be connected into an Xbox 360 and that subject to internal marketing and sales approvals the model could be on sale within 3 months.

The Company has also been working on a built in Blu-ray player however insiders are claiming that Microsoft see the HD format battle moving online with consumers offered 1080p movie and content files as a download as opposed to having to buy a HD DVD or Blu-ray disc.

Both Intel and Microsoft have been supporters of the HD DVD format that is set to be killed off this week.

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