Check out a the story being run out of Joystiq.com, apparently Microsoft have finally woken up to the reality that 512MB sticks just won’t cut it anymore.

But even better, this seems the first step toward opening up the platform if just a little to third party peripherals.

Discussed in the report is the suspected ability to transfer whole game images, those backed-up to HDD, to an attached USB storage device (potentially external HDD enclosures aswell).