It’s as though Microsoft read my article on the Xbox 360’s storage space issues and responded with something awesome. Joystiq has confirmed that support for USB drives is coming to the console in the next update. “You can already plug USB drives into your Xbox”, you say? Not like this you can’t!
Once the update rolls out, you will be able to plug in your USB thumb drive into the console and format it in two ways. One will format the entire drive (up to 16GB) for use, while the other will partition up to 16GB of the drive in order to leave space for your personal files. Once formatted, the drive can be used for storing arcade games, demos, games on demand, or anything else downloaded. You can even load your disc-based games onto the drive and play them just like you can do now with the hard drive installs.
The 16GB limit is a little strange, but Microsoft will allow you to plug two drives into the console at once, essentially giving you 32GB of storage. For those of us limping along with a 20GB HDD, this is a godsend.
Of course, there’s no date on when this update will be hitting our consoles, but the safe bet is in the fall with Natal and the possible Xbox 360 Slim.