Also, the HD-DVD addon for xbox 360 cannot be used for games. So there's another reason why it's pretty useless. I'm sure many people are willing to shell out $199 for an addon. Yeah, I bet.
It's better (usually) for things to come standard on a console then to be sold seperately as an addon.
For example. Game developers are probably not going to develop a HD-DVD game because it's not standard on the system. If they decide to actually go through and make one, they'll be loosing revenue potential because only a small percentage of x360 owners will even have the ability to play the game. No one is going to want to develop something if they can't get it to as manny people as possible.
It's the same problem with the x360's hdd. It doesn't come standard (the core has no HDD) so developers are hesitant to develop games that rely on the HDD for caching and things of that nature. I've actually heard some publishers say they felt limited by the 360's lack of a standard HDD.