Nope, MS is stuck with an outdated concept and required a cable box.. Sony beaing MS at their own game.
I believe a lot of people forget that on the 360 it support Verizon FIOS, TWC, XFinity Time Warner and I believe a few others. In other words you can download those apps and your 360 is now your cable box. MS is doing the same thing with the X1 as I believe right now Verizon FIOS is supported.
From what I can see, MS and Sony are going in opposite direction. MS is looking to make the X1 the cable box for all cable providers while Sony is looking to be a cable type provider. Sony service will be competiting with cable and content providers like Amazon, Hulu and Netflix. MS is looking to partner with those companies and make the X1 a streaming service to those providers.
The HDMI in part is so that the X1 can support any cable provider weather or not they have a app. The X1 TV Guide if done properly may allow MS to be able to show content from all apps in one central location thus making it very simple for users to just pick what they want to watch and the X1 load up the correct app and the content.
Personally I believe neither service actually competes with one another as they are very different in scope. I do believe that Sony will have a harder time getting their IPTV going but since they are a content provider it will be interesting to see how they create this service, what will be available and the price.
Sony already owns a lot of TV and movie rights....that alone puts them in a better position IMO. Breaking bad FTW.
MS solution is not one, it is just a way to view your already existing cable through another device, pretty pointless imo. Standard cable is on the decline.
You do know that MS provide On Demand IPTV through cable apps on their service right. In other words, the list I provided are apps you can download on your 360 today to turn your 360 into a cable box. Verizon is already on the X1 and the apps that are currently supported on the 360 will arive on the X1 within the next 3 to 6 months, thus giving people the option of turning in their cable box and using the X1 as their cable box. For the cable companies that have an app, you will not need to use your cable box and those apps already do live TV and On Demand. I believe people are missing this point.