You are probably right. They are not worse off. It just reveals more about the "true" state they were in before the announcement IMO.
Internet arguments and religious zealotry aside, I am a big fan of fanaticism. You go all the way or you forget about it. So, if Microsoft's vision was that the Xbox 360 was to live in a DVD world, that's a fine choice. However, when you begin stumbling around, especially with words and not actions, it begins to look like maybe the man in charge doesn't know what needs to be done to achieve objectives. This causes low morale in the troops. Making sense?
So, now it sounds like you will be able to upgrade your Xbox 360 with a HD-DVD driver or a Blu-Ray one. How very confusing. A dual support device (HD-DVD + Blu-Ray) would be nice here. Still, it's an add-on I don't fully grasp the benefit of. If games won't use it, what will the Xbox 360 do with one of these drives attached that cannot be achieved with a discrete unit? Will it cost less or will there suddenly be some revolutionary new OS for the Xbox 360?
This is what I am talking about. It just reveals a weakness in Microsoft IMO. It is not a flaw in the device that is the Xbox 360, per se, but it reveals an inability of Microsoft to commit to a format and be forward thinking. I still don't understand why they didn't wait for HD-DVD to include that as base. I suppose it has to do with their "fear" of Blu-Ray and taking a risk of being stuck with a dead medium that suddenly becomes expesive to use because the economies of scale were pulled out from under its feet. I also don't really grasp the HDD situation and the general vision behind the Xbox to be honest. Microsoft has so many weapons that I feel they are not using (I expected them to turn a console into a console + TiVo + networked media player before anyone else).
Sony is not free of faults either. Their lack of HDD is a definite negative. However, the HDD would be most important/useful if TiVo like capabilities were built-in. Without the software/capabilities, the hardware would just sit and rot. I just don't understand why neither is aggressive enough to cut into this market. Sony needs something to shine with in consumer electronics and Microsoft needs an edge in the console business. There it is, but neither is willing to run all the way with it. Must be some complex contracts keeping their hands off the ball or maybe I am just wrong in thinking that a true media center like device would be a killer product, a true 21st century toy. (which would be nice because I think most people, myself included, thought the year 2000 was going to be special and then..."what just happened? NOTHING!!!")