While IGN originally reported that the 360 would see a HD-DVD update
in 2006, they quickly released a response from Microsoft
saying that as of the moment there are no plans for such an update. From the article: "Microsoft, in both America and Japan, has not announced anything regarding the possibility of a next generation DVD drive being placed in the Xbox 360 ... There are currently no plans to release an Xbox 360 equipped with a next generation DVD player."