Whatever this underline my "sandwitch theory" that will sand the Xbox360 in the graveyard

it can't fight the Wii AND the PS3 in the same time ...

Incorporating the HD-DVD player is key. Blu-Ray is the PS3's biggest selling point when a person looks at a 360 or PS3. If they can't offer a HD format coupled with it then they have no chance of competing in hardware sales.

 That might be so, but MS have touted Sony all along for "forcing" BluRay on the consumers, so not only would they contradict their own policy, they'd also show weakness and admittance as well as short stick initial buyers (again). Not a very nice move tbh, I can hardly see a huge company with lots to loose be that careless. Besides; I don't think MS wants either HD format to win as it hardly benefits them longterm or shortterm.

Unlikely, but possible.

MS won't be forcing anything so long as they don't make this a mandatory SKU.

And it's not like they'd be any more in the wrong than Sony who railed MS for releasing a cheaper SKU at launch and not having complete Backwards Compatibility. Both things Sony has gone on to do even more so with the PS3.

Oy. You have that completely backwards. What MS needs to do is get 65nm GPUs in their box and slice the price to $199/279/349. Leaving out HD-DVD could make that possible and as long as HDTV adoption is still under 1/3rd, it makes no sense to step directly onto Sony's turf and duke it out over a small slice of the real market.

Let Sony battle out the format war (in which MS has no financial stake, I might add) and beat the hell out 'em with aggressive pricing.

Autumn 2008?!?!?

PS3 will have 40M consoles sold by then, what's the point.

Actually I think it's really smart of M$, I mean it's about time they get wi-fi or even an hd-dvd player who really wants to pay an extra 300$ for that.

This would be one of the dumbest moves in history. Doubt its true, but if it is, it would sell like crap because of high price, and add the the "too many SKU" criticisms that Sony and Microsoft already get.

A $50-$75 price drop would make a lot more sense.

40M consoles by Autumn 2008?  LOLOLOLOL :)