1. Blu-Ray players are already available for under $200. By 2011/2012 they will be under $50 Retail. MUCH cheaper for wholesale and even cheaper for a company like Microsoft in mass quantity.
2. CPU/GPU comboes more powerful then the PS3, are already available. In 12 - 18 months they will be so cheap and outdated that you won't be able to purchase them anymore. In 3 years, Tech that is 4 - 8 times more powerful will be super cheap, Let alone what they might put in it which would still be affordable.
3. Your forgetting Duel Players. If SONY wanted to up the charges of the Disks, microsoft could go Duel format... either HD-DVD/Blu-Ray OR HV-VMD/Blu-Ray. HV-VMD is built off of Current Red Laser DVD tech and can hold up to 30Gb of data and are currently not much more expeinsive then DVD's. (with future prospects of going up to 200Gb if blue Lasers are used).
This way, MS can use HD-DVD or HV-VMD (for cheaper alternative) to play games, and the Blu-Ray to play movies, thus eliminating any royalties paid to Sony for the use of Blu-ray Disks used for thei games and only pay Royalties to the BDA for the hardware. If this will be cost effective by 2011/2012 then it's a possibility.
It's me... no really, it IS me!!!
