At the keynote speech for the upcoming Consumer Electronics Show, Microsoft is expected to announce that the company has reached the 10 million unit milestone for the Xbox 360. According to Dean Takahashi at Mercury News, Microsoft will also announce support for IPTV on the console as well, giving the Xbox 360 the ability to act as an on demand client for Internet-based subscription video services. This may also be an indicator that Microsoft will be releasing a larger hard drive. While not specifically discussed in the article, it would seem that in order to support on demand and digital video recording functionality more hard drive space would be required to make this a viable option.

Update: It looks like the article has been pulled. An article summary can still be found at Google News here.

Update 2: Link fixed.