That hints at a lack of a HDD because a fully functional 360 would only require the internet for downloading games but should be fully functional without a internet connection otherwise.
A DD only 360 probably wouldn't be a problem but one dependent on Durango for 360 gameplay would be.
Hints at lacking a HDD? First it doesn't say it depends on Durango. It's a stand alone unit that is to be designed to work with Durango. Second, a DD only 360 should require a hard drive or enough flash storage to play GoD games. You can't do that with 4gb of flash. They're going to want to encourage purchasing digital content. At the minimum they would need 16gb of flash.
Tommy McClain