MS makes a lot more from 3rd party game sales than they would from HD-DVD sales, for which they just get a buck or something because HD-DVD used MS codecs.  Better for them to sell the console cheaper and get it out quicker; it was probably a losing bet for 360 to come out closer to PS3 in time, closer in price, and with an HD-DVD player when the BDA was way bigger than the HD-DVD coalition.

MS just wanted to delay and tarnish Blu-Ray, not see HD-DVD win or stay around forever at the expense of speedy 360 adoption. 

^^ Wow, spot on Dvorak article about MS's involvement with HD-DVD.

MS wants more of its consoles in homes for games and downloadable content, and the strategy to get that was to stall adoption of PS3. One tactic of the strategy was massive online FUD and propaganda dissemination about BOTH Blu-Ray and PS3 generally.

EDIT: sad commentary that they didn't use the FUD budget for hardware R&D to try to prevent RRoD, but it may be debatable whether that would have paid off as much financially.   

 Totally agree. The HD DVD drive was a big mistake for Toshiba, but that wasn't Microsoft's problem.

Good thread, i think your spot on, HD-DVD as standard would have given 360 more powerfull games and a new OPD standard, id still have got a PS3 though, as id then have HD-DVD and Blu-Ray.

Sony lost Billions of dollars and you are saying that Microsoft should have also lost billions of dollars for a stupid format thats hardly better than DVD anyway!? An entreched format at that?

Blu Ray was Sonys biggest mistake on the PS3 from a console war perspective anyway. Blu ray delayed the launch of the PS3 due to a lack of diodes for the drives. The technology in the PS3 was old by the time it was released due to that reason. Sure the cell WAS amazing also, but now you have a war between Intel and Nvidia over the GPGPU space. What happens when Nvidia perfects their CUDA and Intel releases their massively parellel GPU/CPU? Sony took risks and none of them might pan out long term.

Discs are a dying medium. M$ were never interested in any of the HD formats really. They believe that downloads are the future. And from what Toshiba have cooking they will release a new non disc format for HD movies in the next 3 years. Since HD DVD death, The movie industry has twice reported that BLU RAY movie sales have gone down not up. BlU RAY will never sell even half of what DVD has, and thats because things will change before the next 3 years are up. People wont have that much of a chance to get their BLU RAY disc collection up or even started. For about 2 years now I have longed to get rid of discs and move to say 20 GB SD cards or Flash drives. Even now they are increasingly cheap to buy. And they are pretty limitless on space.No load times and are far more robust. Disc are incredibly old tech no atter what size Sony introduce.

^Thank you selnor for this contribution. Interesting news and I believe you could be right. A move to a no disc format would be a great move for next generation. Faster loading times and limitless storage space.

A move to completely online distribution would

A. Kill the specialist game shops.

B. Send the consoles packing out of retail stores.

C. Make the ISPs a lot of money

First, the lack of an HD-DVD drive was a non-factor. As others noted, the increase in cost (both in losses incurred and MSRP) would have been astronomical, and it would have severely hampered the rapid early uptake of the machine.

That said, MS made two mistakes (and even these weren't entirely deal-breakers imo):

1. RROD
2. Not cutting the price more aggressively.

Beyond that, what is really doing them in is the out-of-nowhere success of the Wii--can you really fault them for not seeing that runaway train coming? Hell, I was *at* Nintendo HQ in Redmond the week before through several days after the Wii launch and I can assure you that even the people at Nintendo didn't ever, in their wildest dreams, foresee the current situation (yes, I include certain execs in that statement as well as dev people)--it wouldn't be an exaggeration to say that I was more optimistic than some of them and even my ballpark estimates were orders of magnitude off.

Also, bear in mind that while the PS3 is doing decently now, it will never equal the heights of the PS2 and, if Sony makes the same mistakes MS did vis-a-vis a lack of timely price cuts, they will find their installed base petering out as well. This is, of course, academic as the Wii is running away with this generation, so all Sony can really hope for at this point is a distant second place which is hardly something to crow about.

And think about this: if Sony had not shipped with a Blu-ray drive, there was not only the potential to ship the machine sooner but at substantially less cost (both in red ink and to the consumer) which would have allowed it, if not to match the Wii unit-for-unit, at least to have shrunk the gap a bit.

As it stands, its inclusion not only allowed Nintendo to open a mammoth lead but it also forced them to fight tooth and nail for second place in a space they expected to dominate. All this so that they could make a play for a market nobody is sure, even at this point, exists (right now it looks more like Laser Disc than the next DVD which is a helluva price to pay for crippling their gaming unit).

Depends though.. I'd say it's bad because if 360 had built in hd-dvd then MS would've been limping from that loss.

Blu-ray had much bigger support than HD-DVD.

iron, but the 360 did come out a year earlier, thats a year more boost for HDDVD. its not like its just a crappy overpriced standalone. its just like the ps3, alot of consoles are sold for gaming but people end up using the bluray alot. if 360 would have had HDDVD, a bigger HDD from the begging and less failure rate, i can easily say microsoft would have won the console war hands down. the 360 would have sold just as many units, but HDVD would have caught on more and in turn more 360 units sold for high def movies too. but the fact is, this didnt happen and thats why the 360 is limping along in the console war now.