Xbox Series X comes with a 802 GB superfast PCIe 4.0 internal SSD which will greatly reduce the loading time in all the games. We have seen several examples of it in recent days. But the internal storage will only allow gamers to install a handful of AAA games on it. At some time, many players will require the need to stretch the existing storage capacity either with an expansion module from Seagate connected through the high-speed connector or an external HDD/SSD through USB.
However, these 1TB expansion modules form Seagate come at a heavy price. In this case, using an existing HDD/SSD becomes a feasible option given that it has USB 3.0 or faster and a minimum of 128 GB of available storage. Keep in mind that to play Xbox Series games you will still require the recommended expansion storage. External USB storage will only be able to play cross-gen games through backward compatibility.
Also, with this external storage, you won’t be able to plug and play like with the expansion modules as it requires the storage device to be connected through a proprietary high-speed connector to work.
This was clearly visible for a couple of seconds in the hands-on Youtube video uploaded by jackfrags.
For those who are wondering if there is any speed requirement, note that the USB protocol itself defines the speed of transfer. It is around 3Gbit/sec for USB 3.0.