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"I think there actually was very little risk"

Apart from the xbox, Microsoft is heavily involved in HD-DVD. They made much of the software and designed the interface language, they sold addons to the xbox and we don't know how much of the money Toshiba must have lost with its ridiculous cheap players and its 150mio checks came from Microsoft since they are both in the board.

So yes it is bad for MS to loose HD-DVD. They kept the xbox out of the fire that is correct. But that doesn't mean they didn't loose anything. At the moment HD discs are no big deal but if they really succeed DVD they are a far bigger business than game consoles and the people controlling the standard are rewarded handsomely.