Hard Drives are great, but a console has limits on price and how to seperate itself from other devices. How is a console equiped with a hard disk really any different from a Tablet with flash memory?
Lets try it from another view. How are you going to make money on your console without plenty of storage?
You need storage, it seems like that is either ignored or something that is just forgotten in this discussion.
And not just a little storage, you need space for full sized next gen games, we are talking at least 7GB but more likely 20-30GB for "standard" games.
Then there is DLC's, and it's a fact that today DLC's are a major part of any game, you need space for those. And the size of DLC's is going to grow just as must as games will.
That covers the very basics of a gaming console, space for games. Add to this all the secondary functions that is a integrated part of making money on a modern console. Music and Movies, you can buy them, and download them. You need space for them as well.
And in the case of the PS3/4, there is your personal library of home movies, pictures and music, the entertainment hub, which can only grow in the next gen.
As i see it there is 2 ways to solve this, add a harddrive or support 3rd party solutions.
3rd party addons, like USB Sticks/Drives etc is a real option, just see the WIIUU.
In microsofts case you lose a revenue stream for selling overpriced addon solutions.
In Sonys case you lose nothing, i think.
However 3rd party addons have several challenges, no quality control, no idea how fast it is might be a security issue.
A build in hard drive will have exact data on anything from access time to transfer speed and will be well documented and easy to support from the consoles "os".
And since it's there already you might as well use it to circumvent slow optical drives.
I can see a hybrid drive as an option, but afaik you would need a special firmware made just for the consoles since the current drives have firmware written for windows?