Sony : We're on top of our game, we are one hell of a hardware designer/manufacturer, there's a big chance of success along a great risk with Blu-ray. We'll take the risk, if we can't do it now, then when?
Microsoft: Damn we're hurting, we just had to put down our first gaming console after just 4 years. We are not good hardware designers/manufacturers, let's play it safe and hope for the best by launching another console as soon as possible. Let's not take unnecessary risks, let's go with good 'ol cheap DVD.
Years later:
Blu-ray wins format war and RRoD burns millions of X360s.
Sony: Well, what do you know!
Microsoft: Well, what do you know!