Before I go into the details I’ll state that I think it’s best to purchase an Xbox 360 with a hard drive if you’re a hardcore gamer. You certainly can use one without a hard drive but you’ll be restricted on what you can do with the system. You can purchase a drive at any time but you’ll probably end up spending about the same amount that you originally saved up front anyway.

Microsoft has offered an Xbox 360 model without a hard drive for a long time. They may have been available since the system was released but since it’s been several years now I don’t remember for certain (I think they originally only came with hard drives until Microsoft added the ability to store content on external, USB storage devices). Around the holidays these systems are usually heavily promoted. Typically, they come with some form of storage, most likely just a flash drive around 4GB in size.

When the systems were relatively new most gamers probably weren’t using much storage on their hard drives. During the first couple of years of ownership I typically only had game saves and maybe a few videos stored on my system, even though I’ve always had a 360 with a hard drive. My first system had a 20 GB drive and my current system has a 120 GB drive. The 120 GB drive is currently about half-full. I haven’t moved onto the new Slim form-factor and doubt that I’ll do this because I suspect Microsoft will announce the next console sometime after the holiday season.

Early in the life of the 360, and when Xbox Live offerings were significantly less, having a hard drive wasn’t as important. However, over the years Microsoft has added more features, and more content on Xbox Live, that requires storage space.

A few years ago Microsoft added the ability to install disc-based games to the hard drive. This cuts down on load times by reducing the necessity for the system to frequently access the disc during gameplay. In some cases, for games that span multiple discs, it may even eliminate the need to swap discs at certain points. Installing a game to the hard drive can easily take up a couple of gigabytes of storage space.

Downloadable content (a.k.a. DLC) also requires storage space. Sometimes the DLC is little more than a file that unlocks existing features and require very little space. However, other add-ons can easily require several megabytes and some can even add more than a gigabyte. If you have several games eventually this can take up a significant amount of space.

Xbox Live also offers different categories of games that can be purchased and downloaded. These include Xbox Live Arcade games (games that can only be purchased from Xbox Live), original Xbox games such as Halo: Combat Evolved, and even the newest Xbox 360 games that can also be purchased on disc.

If you’re a family just wanting a system to use for watching DVDs, Netflix, and maybe playing a handful of Arcade games then a system without a hard drive might work. The difference certainly isn’t small and for a family paying an additional $100 is a difficult decision. However, if you’re a serious gamer then I don’t recommend even considering the purchase of a system without a hard drive.

Note that the Xbox 360 hard drive is not user-replaceable, unlike how it is with the Playstation 3. The system requires a specific type of hard drive enclosed in a proprietary interface. The 360 expects a specific configuration and will check for it.

It’s possible to purchase a used hard drive from places like GameStop but I don’t think the discount is worth the risk.