Speaking with Ars Technica, Microsoft Director of Platform Strategy Scott Henson explained that the Xbox 360 HD-DVD drive would likely never be internalized into a future version of the console because "[we] don't want to charge customers $200 extra for something that may be the next Betamax." While Henson's frank remark is definitely a PR no-no (though it could easily be interpreted as a shot at Sony), it simply echoes the current state of uncertainty: No one knows which format, HD-DVD or Blu-ray, will prevail. Microsoft has clearly aligned itself and the Xbox 360 with HD-DVD, but it's left open the possibility of a Blu-ray switcheroo -- Peter Moore openly acknowledged as much during CES last year.
Early HD-DVD add-on adopters might eventually get burned (if the format fails), but this certainly won't affect all, if even a majority, of Xbox 360 owners. On the flip side, if Blu-ray flops, 100% of PlayStation 3 owners will feel the burn. Sony is still the bigger risk taker.