Chinese only publication, Economic Daily News reports that a company by the name of Pegatron, who is a subsidiary of hardware giant ASUS, has just been granted a contract to develop "an Xbox 360 with a Blu-Ray Disc ROM drive." Supposedly the device will be on sale from Q4 2008 which is an extremely early release for a rumour not 100% confirmed. As yet, there is no official word from Microsoft themselves but one would imagine that they would eventually bite the bullet and jump on the blu-ray bandwagon if they are to have any hope of competing with the PS3's abilities to play Hi-Def movies. We'll keep you posted.