You didn’t think Lite-On was really manufacturing Blu-ray Disc drives for the Xbox 360, did you?  It doesn’t seem that Microsoft put too much stock into it, supposedly being quoted flat out with “No. Lite-On is not manufacturing Blu-ray drives for Xbox 360.”

The only thing that troubles me here is that TechRadar’s source is about as reliable as DigiTimes.  An unnamed source saying this stuff doesn’t mean much, but whoever the “source” is does seem to have a good understanding of what Microsoft wants to offer in place of Blu-ray; Digital downloads.

“As we have stated, games are what are driving consumers to purchase game consoles and we remain focused on providing the largest library of blockbuster game available.”

Speaking in general (not exclusive to Xbox 360), Microsoft shouldn’t stick to digital downloads at this point because of bandwidth concerns, but it sure wouldn’t shock me if they stuck to that path.  They can own everything from end-to-end, digital downloads are exactly what Microsoft wants.

Update: CED just published the same quotes that were directed at them from the Microsoft spokeswoman, so now I'm assuming this is a Microsoft official response.