Including an HD-DVD drive would've been a disaster. Instead of launching a year earlier at a much cheaper price, they would've launched around the same time as the PS3 and Wii and priced about the same as the PS3, the 360 would've been murdered.
Sony can get away with trying to win a format war with their console, because they have a strong brandname, and can afford to take huge losses on the PS3 thanks to the PS2 and PSP making up a lot of that. If MS were taking the same losses on the 360 with the addition of the cost of RROD repairs, they would probably be out of the console business this generation. By leaving HD-DVD out, they have a fighting chance for 2nd place, may actually make a profit eventually on the 360, and increased their marketshare.
Other than RROD, the 360's biggest mistake was not including an HD in every console, they essentially took a step back on that front, and it not only hurts the quality of games, but also goes against their Xbox Live plans for digital distribution of media.
Currently Playing: Saints Row 2 | Battlefield 2 | Company of Heroes
Recently Beaten: Gears of War | Super Mario Galaxy | Darwinia | MGS4 | Sam and Max Ep. 4, Portal | Mirror's Edge | Uncharted | Mass Effect
Looking Forward to: Alan Wake | Splinter Cell : Conviction | The Last Guardian | Batman: Arkham Asylum | SMG2 | Mass Effect 2 |
