"Microsoft will likely offer a Blu-ray drive with the Elite," says Pachter.
Microsoft's release of the Xbox 360 Elite validates Sony's focus on capturing the early market for high-definition entertainment, according to Wedbush Morgan analyst Michael Pachter.
As the format holder continues to sign up more providers of downloadable content to Xbox Live Marketplace, the support for HDMI output is Microsoft's acknowledgement that the hi-def consumer is more important that it initially believed.
"Microsoft's move is an endorsement of high-definition output, and its inclusion of HDMI validates that Sony's initial strategy was correct," said Pachter, speaking exclusively to GamesIndustry.biz.
"The 120 GB hard-drive is focused on helping the roll-out of IPTV, and I expect a progression of HDTV broadcast from the current 720p to the 1080p standard over the next few years, so the HDMI output will be relevant."
"On balance, this is a very smart move by Microsoft, but it appears to validate Sony's strategy, and serves as an acknowledgement that HD content matters," he commented.