Microsoft announced, via their Gamerscore Blog, that the Xbox 360 HD DVD drive is being discontinued:
As a result of recent decisions made by Toshiba, Hollywood studios, and retailers, Microsoft plans to withdraw from HD DVD. Xbox will no longer manufacture new HD DVD players for the Xbox 360, but we will continue to provide standard product and warranty support for all Xbox 360 HD DVD Players in the market.
See their post for the full announcement. This isn’t surprising, of course, as everyone is pulling out of the format at this point. But it clears up the uncertainty over timing, as well as laying to rest the rumors about pricing changes, etc, with continued sales. At this point the drives will probably end up on clearance soon. If you have an HD DVD collection the Xbox 360 drive could be a good buy as an insurance policy against future player failures. Even if you don’t have an Xbox 360, the add-on drive also works as a PC USB drive.