While Microsoft is still apparently pondering the future of storage solutions for the Xbox 360, it looks as if they have decided to at least ease some of the burden by enabling the use of USB Mass Storage devices on the Xbox 360 and allowing users to store secure Xbox 360 data.

From what we have been able to uncover, the USB Mass Storage support will come as an update to arrive later this spring or early summer. What the USB Mass Storage support will do is allow USB drives of flash memory variety to be formatted with an Xbox 360 512MB system partition and allow the remainder of the space (up to 16GB) to be used for storage of just about any Xbox 360 content.

Apparently, there are going to be some limitations, however. First, you can only use USB flash memory devices that are 16GB of less. Use of a larger flash drive is said to be possible, but it will only create the 512MB system partition and an additional storage partition that will be about 15GB of space. The rest of the drive over the 16GB limit would not be used. Next is that only two of these flash memory devices can be connected and registered with a single console at one time. In other words, there is a 32GB cap if you are using two 16GB USB flash memory drives.

The decision to go this route by Microsoft does two things: it provides the consumer with the ability to purchase lower-cost USB flash drives in sizes up to 16GB to store their data on; and it helps Microsoft, as they don’t have to be stuck with proprietary flash card drives in sizes that are simply too small. as prices continue to go down for the cost of flash memory.

What this strategy does not answer. However, is what Microsoft’s future hard drive strategy will be going forward. We continue to hear from our sources that Microsoft is working their way through the on-hand hard drives that they have in stock or that they are contracted to purchase. We continue to hear that Microsoft will release the 250GB hard drive as a separate offering for those wanting to upgrade at some point to replace the 120GB hard drive offering. Currently, however, Microsoft has been content to offer the 250GB hard drive as bonus to those purchasing special edition console releases. Still, we do expect to make an announcement offering the 250GB hard drive, but that isn’t likely to come until E3 from what we are hearing now.