Speaking with The Guardian, the ex-Corporate Vice-President of Microsoft's Interactive Entertainment Business division revealed that the hard disk drive high cost was the reason why they stopped producing the original Xbox.
"The hard drive in every Xbox killed us", he explained. "We were still selling it at $199 and the hard drive was like $70. That's why we prematurely left the original Xbox, because the more we were selling - there was still great demand - it was killing us, and there was no way to bring the price down."
"So in the end we determined at around the 25 million unit mark that we just needed to slow this thing down and just not sell any more, and move to the 360 as quickly as we possibly could. And to this day people still believe we left the Xbox too early but it was purely for financial purposes."
According to Moore, that Xbox HDD story is the reason behind the hard disk-less Xbox 360 Arcade SKU. "Not having a hard drive in every Xbox 360 was a hard decision, but we wanted to get price under control", he concluded.
