I saw this first here: http://feeds.joystiq.com/~r/weblogsinc/joystiq/~3/103076806/

First, its my opinion that Microsoft absolutely did the right thing by not including HDMI when the XBox360 released.  The rollout of everything related to HDMI from a hardware standpoint has been rough and incongruent.  HDMI support in hardware (players, TVs, projectors) is only now reaching a tolerable point and would have hurt the Xbox360 when it launched.  Copyright holders are, of course, jumping up and down to get everything going over an HDCP enabled connection and the future of video and sound is HDMI 1.3 right now with its wider color depth and increased bandwidth for high definition audio.  I do hope they are making this an HDMI 1.3 device.

With the new price of $476 if you were to buy the Wireless adapter, the wireless controller/charging station, and the HD-DVD add-on your total price is $800.  Suddenly Sony doesn't look quite so crazy with the $599 PS3, do they?  Granted, you don't NEED to buy the HD-DVD drive for $199 but for $600 (HDMI Xbox+wireless controlers+120gbhd, 60GB PS3 with Bluetooth and Blu-Ray, both w/802.11) would you rather have 60gb more of hard drive space or High-def optical disc capability?

At any rate, while it may piss of the 6million existing Xbox360 customers its the right move for MSFT to make, and also in my eyes validates many of the PS3 design decisions.  It also means I may get an XBox360 to put in my home theater for Gears of War and Dead Rising now that I can (almost) get an HDMI version.

{edit: Tycho agrees with me and then some http://www.penny-arcade.com/2007/03/21/#22092}