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(Updated below.) Here's a Microsoft quote from a year ago. I love this quote, because it is so fiendishly slippery: "Every game will work with every Xbox 360 system," a Microsoft spokesman told GamePro when asked about the "Hard Drive Required" sticker. "But just like some games will require you to have a Memory Unit to save games, some games will require you to have a Hard Drive to experience them." Didja catch that? All 360 games will actually run on all Xbox 360s. Huzzah! Unless of course they require something else. Like a hard drive. So all 360 games will not run on all 360s. Just ones with the right overpriced peripherals attached to them. When the 360 launched, MS was pretty adamant that there would be no breaking of this rule. Then we found out that you need an HDD for Xbox backwards compatibility. No biggie. Oh, and for MMOs. (Plural? Isn't there just the one?) And for that UK football game. And for online co-op in Crackdown. And for online multiplayer in Burnout Paradise. But that's all, we swear. Check out the Ninja Blade product page. 
This is why you don't buy a Core system – even at the new, tempting $199 price. To make that system actually play all Xbox 360 games properly, you would need to add either a $120 20GB drive, or a $200 (yes) 160GB 120GB drive. The big HDD costs as much as the Core unit by itself. To contrast, a Pro system with the 60GB drive included will run you $299. You'll end up paying more if you try to buy it piecemeal. A few months ago, Gearbox sort of casually mentioned the fact that their forthcoming title Borderlands would require the HDD. And then MS made them backpeddle like crazy when a small furor erupted. How much do you want to bet they were telling the truth the first time? It's been said before, but I'll say it again: they need to stop selling that Core unit. This is really disingenuous. A memory card is one thing, but requiring stupendously overpriced proprietary HDD is something else altogether. Something that rhymes with "bass tape". On second thought... perhaps they are dropping the Core, and this week's fire-sale prices are just a way of clearing them out. We shall see. (Also, let's see if they edit that product page. I wouldn't put it past them. "Sorry, it was an error.") Update: Yup, look at that. All mention of the HDD requirment is now gone. As is "user creatable content". Somebody really needs to get their shit together on the MS Xbox site. ((Thanks Xav for the correction on the drive size. He points out that apparently they make this "HDD required" error a lot.))
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Call of Duty 4, Soulcalibur IV and even Halo 3 at one point had it. I wouldn't think Ninja Blade would need it so it could be removed. Some people would see it as back-pedaling but I just think sometimes people check the wrong box when making product pages.
The 120GB HDD (it's 60 and 120, there is no 160) is overpriced and needs to be reduced. The Core unit sucks but I don't get why hardcore gamers hate it so much. It isn't for us. The Core is the Family Unit Microsoft uses as a sign saying OUR CONSOLE IS $199 and in fine print it says Well, Starting At.
I think you'd be hard pressed to find any hardcore gamer who owns a Core unit, so that in mind, this fervor over the requirement is a little silly. I don't imagine any non-hardcore gamers are buying Borderlands, anyway.
As for the sly PR speak, sounds like a shitty way of them saying "to get the most out of xbox live (the experience as they like to call it) you'd need the hard drive anyway, bitches."
I don't think you can honestly say that the Core unit doesn't play all Xbox 360 games a Core purchaser would want to play. But, they should make a distinction on the Xbox 360 console to tell buyers it won't work on their system ... even though this tag on the box is supposed to tell customers. Just like Sony should tell customers they don't support backwards compatibility or that there hasn't been a decent Wii release since.... who knows.
The device is overpriced and needs to come down. Everyone is doing stupid shit in this "Race." Nintendo's new sensor for Wii-motes is a ripoff and a slap in the face to both consumers who were promised true 1-to-1 support and developers who didn't hear about the thing until we did. Sony announces a new SKU every other month with different hard drive sizes and has removed so many features from the current units that early adopters are feeling a little better about being ripped off in the beginning.
It's hard for me to not point out one bull business plan, which Microsoft has, and not point out the others in the same breath.
Business sucks. I think some of the bosses here would say, "Them's the breaks."