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If you like me bought an XBOX 360 core system to use as an MCE 2005 extender, then you would have been caught out by the fact that you can't update the firmware on your console to the latest version via XBOX live if you don't have a storage device (either the HDD or a memory unit), even though the spring update press release says you can. Microsoft are yet (as of July 2006) to release the update on CD/DVD to allow this to be done offline.

There are a number of reasons why you need to update the firmware of your xbox 360 console to the latest version. The spring update includes a number of DVD player enhancements which would make your use of the XBOX 360 as a media hub much more enjoyable. The major one for me was the ability to stop the console from automatically playing a DVD left in the drive, when the console is powered up using the power button. It now goes to the dashboard. The full list of enhancements is here.

The other thing I noticed when I updated my console via XBOX live was that my console now had support for the live camera accessory, something that was not available on the console before, so obviously console updates is the preferred way for adding support for various accessories (the HD DVD drive will be available soon), which is why I'm a bit annoyed that the console was not designed with some form of onboard memory to allow for these without having to buy external storage units.

I don't think it was an oversight, rather a deliberate way of making sure that people buy additional accessories to generate more funds of Micro$oft! Even the HD component cable is not included in the core system.

I was lucky to be able to borrow a HDD storage device from a colleague at work, perform the update, and return the unit, so now I have the latest firmware (June 2006), on my XBOX 360 and have not spent un-necessary funds on an accessory I don't need.

Just for your information, you don't even need to create a profile on XBOX live to perform the update, the first thing the console does before trying to sign in is to see if there are any updates, so you can perform an update without having to log in or sign up to XBOX live. The best way to do this is via the Test XBOX Live button on the Network section of the system blade.