HD-DVD died too early, had it lived longer, competition would have driven prices lower and now we'd see cheaper BD players and movies and higher sales. Higher BD drives production would have lowered faster its price too, lowering also PS3 production costs. Anyhow, in a year BD drives will be quite cheap, and Cell will be cheaper too, so Sony costs nightmare will be finally over. If Sony will be eager to overtake MS before, it will have to work on pricing too, so it will cost money, but it could pay more in the mid and long term, so it's up to them to decide.
PR spin is just what we have to expect, as Sony will do anything that could help, but hey, doesn't MS always do the same? (I didn't say Nintendo, because Wii's success exceeded even their rosiest predictions).
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