Did anyone think MS picking DVD was a mistake in the first place? I thought it was just a different solution, with pros and cons like all solutions...
Microsoft didn't have a choice. They wanted to be cheaper, and they wanted to be first on the market by as big a margin as possible. This was the most important part of their philosophy. HD DVD clearly has the same problem (same diode afaik), so if they had stuck to HD DVD for the 360 (their original plan) they wouldn't have been able to launch last November.
For their respective strategies, both Sony and Microsoft have made the right decisions, I am fairly certain of that. Right now, though, Sony is suffering more for their own strategy, by virtue of blue diode shortages. They took a big chance using a lot of new technologies, and that carries a risk. Microsoft on the other hand suffers from a lot of retailers ignoring next-gen (marketing wise) until this winter, will no doubt suffer from having less space on their discs, and having a console that is more rushed in general (i.e. very hot, external power supply, etc.), suffered from similar problems getting the consoles out there as Sony does now, and will suffer from a lot of first next-gen games that will only make it onto the PS3 in an improved form, potentially putting the latter in a more positive light than it even deserves.
On the other hand, Microsoft will be able to keep their consoles cheaper for the whole time, and with an audience that has considerable buying power (early adopters) makes it attractive for publishers to release their games for both the 360 and PS3.
I'm sure that the Holiday Season in 2007 will give the first clues on how it will all pan out in the end.
For now, we will have to keep a close watch on blue-diode production.
