Microsoft has announced that the Apple iPod MP3 player will interface with the Xbox 360 console. Users will be able to browse the iPod playlists and play MP3s directly from the iPod through the Xbox 360 interface.

The iPod can be plugged directly into the USB port of the Xbox360 console, and thus this feature will be available to both buyers of the XBox 360 Core System and the XBox 360 Premium Edition.

The Xbox 360’s iPod connectivity will allow users to play music stored on the iPod through the sound system connected to the XBox 360 console, using a process commonly referred to as “streaming”, namely the real time replay of audio (or video) data stored on one device and replayed on another.

In the past, owners of the original Xbox were able to rip songs from CD onto the built-in harddrive. Some games allowed to use ripped songs as background music during gameplay. The new Xbox 360 console doesn’t require this ripping process - instead, MP3s stored on the iPod can be accessed directly through the XBox 360 interface and played through the sound system connected to the XBox 360 console.

“We see the Xbox 360 as replacing your CD player in your entertainment center, but also as the best digital media amplifier available,” said Xbox 360 Product Manager, Barry Steinglass. “With Xbox 360 you’ve got one central place to listen to all your music on the best sound system in the house.”

In contrast to the original Xbox, the XBox 360 allows users to make personalized game soundtracks for ALL games played on the console. Users will be able to listen to soundtracks from either their hard drive or MP3s stored on the their iPod during game play.