Downloads? Again? When will they come clean?
MS is in a bind, a big, bad bind.
They are claiming that a supply shortage is preventing better sales of the 360 in North America. OK, what caused that shortage, and why do I still see plenty of units in stores? If supply is a problem, where's the out of stock sign at Amazon? MS has already attempted to discount the NPD numbers for February (just in time as well) and have pre-emptively dismissed the March numbers acknowledging that PS3 will sell better in North America during March as well.
I have news for MS, we can see through your smoke screen. Your sales of 360 units have been declining for a year now. The death of HD-DVD did nothing to help and the confusion over a Blu-Ray drive for the 360 won't help you in the future. Worldwide sales of console units have seen the 360 slip into third place for monthly sales for a few months now. Nintendo still leads the way by a considerable margin, but Microsoft is trailing both nintendo and Sony in worldwide console sales. Many people see the Wii as being in a different market segment to the 360/PS3. Certainly from the point of view of consoles capable of HDTV resolution (720p) gaming the PS3 is comfortably outselling the 360 worldwide. 360 still has a greater installed user base, but quoting that fact is akin to sitting on your laurels.
Microsoft claim that Blu-Ray is not part of the Xbox future and instead point to digital downloads. If Digital Downloads were the future why did MS spend so much time and money attempting to have HD-DVD win the HD format war?
Digital downloads are undeniably the future for video - long term. Long term as in 10 years or so. The real problem is that current broadband market penetration is not even close to 100%. Of the customers who have 'broadband' the number with a sufficiently fast typical connection speed is not very large. There are some urban areas where fiber has been installed, and some cable providers quote really good numbers for *peak* bandwidth, but typically the real world sustained bandwidth is no where near this peak. Most DSL customers get between 1.5 and 3 Mbits/second, at best. This is not high enough to handle streaming video at HD resolution, nor even DVD resolution. For downloads to win truly high speed broadband has to become a universally available commodity, just as you can get plain old telephones to work just about anywhere as long as there is a pair of wet strings connecting you. That is simply not going to happen in the short-medium term. There is too much infrastructure to put in place and too much market penetration to be done, especially at a time of economic uncertainty. So downloads, regardless of arguments over quality, are not currently practical for the majority of customers. I'd argue that since the quality of even the best pseudo-HD content available for download is in reality no much better than a well encoded DVD, it's not entirely honest to call it high definition. Granted Apple's HD downloads look better than most of the horribly over-compressed HD pay-per-view movie feeds. Still they aren't HD, and they don't equate to Blu-Ray or HD-DVD.
Last, Microsoft may have a bigger problem with Blu-Ray than the obvious one of not wanting to support anything Sony. Profile 1.1 of Blu-Ray requires certain things. You need to be able to handle two video streams to do the PiP, and you must have at least 256MB of storage available to the Blu-Ray player. Otherwise you're not going to make it as a Profile 1.1 player. Profile 2.0 takes the local storage thing a little further still, mandating 1GB. Microsoft's problem here may be two fold. Can they write a Blu-Ray player for the 360 that can handle the two video streams and do PiP? Can they honestly say that every 360 has 256MB (or 1GB) of local storage for Blu-Ray? The old Core system sure doesn't. Microsoft may literally be in a position where they have to have an almost complete Blu-Ray player as an external add on that simply feeds the processed video via USB to the 60 for display, making the Blu-Ray drive a more complicated add-on to produce than the HD-DVD one ever was.
So there may be both political and technical hurdles for a Blu-Ray Xbox360 add-on. We'll never know, Microsoft aren't telling, and they sure aren't going to admit that the 360 can't handle it, nor will they willingly release a BD add-on that can only manage Profile 1.0.
Like I say, they're in a bind, and it may be a really big, bad bind.