According to GI.biz , retail sources in the UK have said that Microsoft has intimated to them that the HD-DVD add-on for the Xbox 360 will be priced such that console and peripheral combined are cheaper than Sony's PS3.

At E3 last week, Microsoft discussed its plans to launch a HD-DVD component for the Xbox 360 later this year, but did not reveal any further information regarding the pricing of the unit.

The Xbox 360 retails at GBP 279 in the UK, with the Core System version selling for GBP 209, while the 60GB model of the PlayStation 3 is expected to cost between GBP 399 and GBP 419 when it arrives in late November.

Microsoft's alleged comments to UK retailers seem to suggest that the HD-DVD peripheral, which allows playback of high definition movies using Toshiba's next-generation DVD standard, will be priced below GBP 130, making an Xbox 360 and HD-DVD player bundle into a potentially attractive option at Christmas.