Xbox 360: No Spring Update?

Major Nelson's podcast interview with Marc Whitten indicated that there isn't going to be the usual Spring Update this year (one of two yearly updates). At least, not in the sense of the usual update that adds new features, like the DivX support added last fall.

And, on top of that, they're going to be removing content that is currently available.

This is a problem because the Xbox 360 comes with a small hard drive, and depends on the idea that you can delete content at any time knowing that you can log in and re-download it if you want to play it again. At some point, for some content, that will stop being true.

These both seem like bad signs.

Microsoft is a fierce competitor when it's motivated, but when it's not motivated, it's quite capable of basically parking a product that it considers to be "good enough". Look at Internet Explorer. They were all over IE development up to IE6, and then shelved it for years until Firefox started eating into their lead enough to get them working on IE7.

If there's no big Spring update, then it's clear that a lot of the folks that have been working on the 360 firmware since launch are doing something else. Working on the Zune perhaps?

And what of Blu-Ray on the 360?

The only way having no Spring Update would be forgivable would be if the folks that should have been working on it have been working on Blu-Ray support instead. That would be a good strategic move, because Microsoft is losing console sales to the PS3 because of Blu-Ray. I have a PS3 now to use as a Blu-Ray player, but this means now Microsoft is competing with Sony head-on for my accessory and game dollars. So far the only game on the PS3 I've actually bought is PixelJunk Monsters, but Home and LittleBigPlanet are looking pretty good. More interesting than anything coming on the 360, actually.

So what is it? Is Microsoft hunkering down for some real updates? Or have they made their bet on the 360 and now they're going to let it ride?