Molyneux would prefer to have HDD
But he believes in 360 Core system.
Peter Molyneux says that while he would prefer to have a hard disk to work with as standard, he believes that backing low-price console hardware is "really important".
"Given the choice, I'd obviously choose a hard drive every day of the week," he told Eurogamer in an interview published today.
"But the balance to that is you're supporting a system which is an awful lot cheaper.
"What I'm trying to address with Fable 2 is say 'Look, anybody can play this game.' That's what I really want. So supporting the cheaper price is really important."
Molyneux's Lionhead Studios was bought by Microsoft in 2006, and is currently working on action-RPG Fable 2, which was given centre stage in Microsoft's GDC keynote.
The game - which is designed to be accessible as well as rewarding for core players - will be among the first to benefit from a shared reward system that allows certain Xbox Live Arcade games to hand out virtual currency that can be spent in the world of Fable 2.
"I think it was my seed of an idea... Was it my idea? I don't know. It was a cumulative effort really," he told Eurogamer when asked about how this came about.
His colleague in the demonstration added that he remembered it as having been Molyneux's idea "to start talking about how we could use the infrastructure".
"Yes, then they went off and designed the games," said Molyneux.
For more on Fable 2, check out our Fable 2 GDC preview, unveiling co-operative play, or for more from Molyneux on other subjects, including the Wii and PC gaming, head through the blue-word doorway for the rest of our Peter Molyneux interview.