(RUMOR) - Microsoft’s Xbox 2 iPod killerCould Microsoft be preparing to drop a potential bombshell with the Xbox 2? We don’t know anything for certain yet, but check out this tantalizing bit of gossip we received in response to our post earlier today about the Xbox 2 and whether or not it’s going to sport a hard drive: Regarding the Xbox 2 hard drive, I was snowboarding in Whistler, B.C. from February 19 - 26, 2004. We were in a bar called the Amsterdam Cafe in the village one night and J. Allard, the head of Microsoft’s Xbox division was in the bar with some friends. I recognized him from a recent Business 2.0 article and we started talking. (He bought my friends and I a round of drinks he called “Hey Zeuses” - they were Red Bull and tequila and they were nasty.) Anyway, we were talking about the Xbox 2 and he said their current plan was not to include a hard drive in the Xbox 2 itself, but to offer a portable hard drive as an accessory you could buy separately. Here’s the kicker: He said what they were trying to do was to incorporate MP3 (and WMA, obviously) functionality into the portable hard drive and turn the thing into an iPod killer. Basically, the idea was to come up with an MP3 player that was as good or better than the iPod that would also serve as the hard drive for the Xbox 2. And he said they planned to sell them as a loss leader at $100 each. If this is true (and let’s be clear that we haven’t gotten any independent confirmation of this), it would be huge, although we’re still a long way off from the Xbox 2 going on sale and a lot of things could change between now and next year.