With the HD DVD ship sinking faster than the Titanic, the rats are quickly abandoning the ship: according to rumors, Microsoft may be releasing a Blu-ray-based Xbox 360 soon. We don't know if the rumor is real, although it seems reasonable to expect it. The only real question is when. Their Microsoft insiders are saying May. We are saying maybe. [Smarthouse]
Who cares? The Xbox doesn't benefit from having a hi-def drive (games can't use it without being incompatible with the millions of existing machines). By the time the bare drives are cheap enough for M$ to add one without excessively raising the price of the console, stand-alone players will be cheap and plentiful.
Many people here think that because Sony are vested in Blu-ray, M$ needs to be playing the HD movie arena. This is just not true. While M$ may own a codec or two, they don't own a content provider (ie, a movie studio).