http://news.softpedia.com/news/The-Microsoft-Toshiba-HD-DVD-Alliance-Changes-Xbox-360-3902.shtml
Considering that such a decision would postpone the launching date, Microsoft will equip the initial models with classic DVD drives, and only after the new HD-DVD are ready, the Xbox will incorporate them.
Xbox 360 going into the HD-DVD side is an important advantage for Toshiba and in the same time a response to Sony’s announcement that the new Play Station 3 will incorporate the Blu-Ray standard.