It seems that multiple other sources believe that Microsoft is moving toward a 1TB hard drive for the Xbox 360 platform. We can tell you from what we are hearing that this just does not seem to be the case. As we told you yesterday, our moles tell us that Microsoft has qualified several 320GB and 500GB models, but no mention of a 1TB hard drive has been made.

The suggestion of a 1TB hard drive for the Xbox 360 does not even make sense at the moment due to the fact that 2.5-inch notebook style hard drives like the Xbox 360 uses are currently at 500GB max; and while the hard drive manufacturing sources that we have checked with say that 1TB hard drives in the 2.5-inch form factor are on the horizon, they will likely see an interim step to 750GB first and then later a 1TB drive in the 2.5-inch form factor late this year, but more likely early next year.

From what we hear today, price is the main issue, with a larger hard drive add-on to be released, and it is doubtful that Microsoft would elect to offer a 1TB or 750GB hard drive this soon due to the increased cost that manufacturers would want for their latest higher density platters that would have to go into these drives.

We continue to stand by our prediction of a 320GB or 500GB drive instead, as that does offer the most cost effective numbers that Microsoft could make work. According to our moles today, after checking back the price delta between the 320GB and the 500GB in the numbers that Microsoft is willing to order the drives in might now favor going with a 500GB 2-platter design and by passing the 320GB altogether.

What is surprising is the insistence that other outlets have for a 1TB option, which our sources continue to claim just isn’t the case as it does not make economic sense at the moment. However, as we suggest above, the wheeling and dealing going on behind the curtain might deliver the 500GB drive at the $200 price point that Microsoft is looking for. We still are also being told that you will not have to wait that long for it, and larger flash memory cards are on tap as we told you yesterday, but the size of these new cards is still up in the air.