Just a few days after the official announcement of Microsoft about a peripheral HD DVD player for the XBox 360, the US software giant seems to sit on the fence over next-generation DVD format support, saying that the game console could also support Blu-Ray.

At least this is what the Japanese publication ITMedia reports, citing an interview with Microsoft's Game boss Peter Moore at last week's CES trade show. According to the article, Moore revealed that a Blu-Ray drive could also be on the cards for the system.

Currently, Microsoft supports Toshiba's rival HD-DVD specification over Sony's Blu-Ray, but the company uses standard DVDs for Xbox 360 games and will only support HD-DVD movies with the release of the new external drive later this year.

Sony's rival console PlayStation 3 will be equipped with an internal Blu-Ray drive, which, according to Moore, will be a major limitation for Sony if the Blu-Ray standard fails to take off and HD-DVD becomes the dominant standard.

Moore added that Microsoft's decision to offer a High Definition player peripherally to the Xbox 360, gives the company the flexibility to adapt to whichever standard wins out in the end.

In the meantime, Ken Kutaragi, president of Sony Consumer Entertainment, reportedly told attendees of a 2005 corporate meeting commenting on the price of the PS3 "it'll be expensive." Analysts and many video game developers, though, suspect the system may debut with a price tag reaching nearly $500.

"We haven't made an official announcement about pricing yet," said Ryan Bowling, PR manager for Sony. "At this point, that's all speculation."

The strongest argument behind the $499 price point is the PS3's inclusion of a Blu-Ray drive. This bleeding edge technology will give Sony (Research) significant bragging rights, but it comes at a cost. Pioneer last week at the Consumer Electronics Show unveiled a standalone Blu-Ray player for $1,800.

Obviously, Pioneer's earning some profit there ? and Sony will almost certainly subsidize the cost of the drives, but you're still looking at an expensive bit of hardware.