The so-called consoles war, pitting the Microsoft Xbox 360 against the Sony PlayStation 3, and the so-called high definition war, pitting the HD-DVD against the Blu-ray, have crossed paths as Microsoft adopted the HD-DVD for its gaming console while Sony made the Blu-ray a centerpiece of the PlayStation experience, hoping to draw in more than gamers to the console.

Earlier this year, after the announcement from Warner Bros. that its sill no longer supported HD-DVD, Toshiba has announced it will cease support for the format. The Blu-ray has won the format war and is now the only alternative when it comes to next generation multimedia playback. And, in the process of winning its format war, Sony has created a big problem for Microsoft.

With the HD-DVD now history, it seemed that Microsoft had no alternative but to adopt the Blu-ray as a optional add-on and talks were reported to be going on between Microsoft and Sony on how the Blu-ray add-on would work for the PS3. Then, Microsoft did a 180-degree turn and said that no such talks were going on and that digital download is more important for the Xbox 360 than a Blu-ray add-on. Microsoft cited statistics that showed that the HD-DVD add-on had only a 3% adoption rate and stated that the cost to develop a Blu-ray add-on would not be covered by sales.

The China-based Economic Daily News is now reporting and cited as saying that a company called Pegatron Technology, which is an OEM subsidiary of the more well known Asustek Computers, has been contacted by Microsoft and has received orders to assemble Xbox 360 consoles equipped with a Blu-ray Disc (BD)-ROM drive. The same source says that shipments are expected to begin in late fall.

The news is somewhat confusing as it seems to be referring to a Xbox 360 with an integrated Blu-ray player rather than to an add-on, while at no point did Microsoft talk about an integrated Blu-ray device. This discrepancy alone could mean that the information should not be taken at face value.

We'll keep an eye out and see if Microsoft makes any announcement regarding the Xbox 360 in the next couple of days.