It still seems like an Xbox 360 is the way to go for HD-DVD, unless you have absolutely no interest in gaming. Even if not, you could still use it to download standard and high-def content through marketplace. And then there's the game demos, Media Center extender, music playback (through ripping your CDs or attaching your iPod), all for free.

$499 + $200 seems like a good deal if you have any interests outside of pure HD-DVD playback.

True, True on the 360. However hopefully they will have the unit with HDMI soon. 360 as a HD-DVD player now has no way to deliver Uncompressed PCM/DD+ etc. It downconverts it all to DTS to send down the optical. Also, no hope of regular DVD upconversion until then either as no macrovision for anything above 480 on the components and mainstream players never break that "analog hole" rule.

I will be getting the one with HDMI. If the rumors are not true and there will be no 360 w/hdmi, I will not. Then my HD-A1 & PS3 will get me by until I would say, the third gen of the LG hybrid.

I can't tell whose chink in the armor is worse, Sony's inability to drop prices, or the fact that HDDVD (too many Ds) is going to start looking cheap(er). Sony only has this mentality because general consumers generally equate high price with high quality, and their stalwart effort to bleed DVD enthusiasts dry might be stoic enough to win out.

OTOH, by dropping HD-DVD prices down to even regular DVD prices, there's a chance consumers may simply say "hey, I can get this high-def player for the same price as this dvd player I'm going to buy".

It won't replace the $20 DVD players out there, but once you break below $500, more consumers get interested. The next barrier is around $250 when mass-adoption is likely to take place.