Microsoft's current response doesn't yet explain how the company can rectify its claimed support of 1080p with the fact that the 360 doesn't support the connection (HDMI) that will actually allow most 1080p HDTVs to display the signal. While the VGA solution may work for a minority of 1080p HDTV owners, we're left wondering if Microsoft is promoting this new 1080p capability primarily to blunt the onslaught of the PlayStation 3, which supports HDMI and 1080p. Direct information regarding whether or not the current X360 hardware is able to output a digital signal would clarify the entire situation, but Microsoft hasn't been able to answer this question.
Back in the days before the 360 launched, Microsoft stated that HDMI wires for the Xbox 360 would be released "when the market called for them." If the Xbox 360 is really going to be a 1080p machine, we're pretty sure the market is calling for HDMI wires right now. The next question is whether Microsoft will hear it.