IF they integrated the hddvd from the start, bluray wouldn't have had a chance.
I assume you are conveniently ignoring the fact that this would have likely delayed the release of the Xbox 360 until about the same time as the PS3 and increased the price to the PS3 level, and then Microsoft would have sold virtually no units, right?
And imagine what it would have done to the already questionable reliability of the 360.
Not being a pain, but you have to give Sony credit. It appears to me that there really was nothing Microsoft could have done to stop the Blu-ray tide.
(Toshiba, on the other hand ...)