Microsoft Xbox 360 owners with crowded hard drives can rejoice, as the company has announced that beginning April 6 it will be possible to plug a USB flash drive into the console and use it to store data like profiles, game saves, and demos.  Up to 16GB on up to two simultaneous USB drives will be open for use, and if you don't have any old drives sitting around, you'll be able to buy Xbox-branded SanDisk drives that include the online system update needed to make it all work.  Joystiq has the details.

In a conversation with Joystiq, Larry "Major Nelson" Hryb informed us that all data will be transferable to the USB device, except for installed games -- users will need to re-install those directly to the USB device once more. He assured us, however, that, "If you've got a 16GB and you only want to use 8, you can use the UI and throttle it back." Further, he reiterated to Joystiq that while this branded device is certainly one option, other Flash drives (including those larger than 16GB) will work in the same capacity.

Why has Microsoft held out on adding this capability until now?  Well, those expensive proprietary Xbox 360 hard drives weren't going to sell themselves.  It really seems that the company is trying to hang on to the hard drive market when with this flash drive update, as the use of the flash drives is restricted to just enough capacity to be useful, but not so much that one could sidestep buying a larger hard drive.  While not a perfect solution, it is a definite big step in the right direction when it comes to providing customers with multiple storage options from different vendors.  Kudos to Microsoft for making it happen.