What's going on with the 360 and Blu-Ray?

Sony drops the hint that Microsoft is in talks with them to add Blu-Ray drives to the 360... then Microsoft angrily denies it.

Microsoft seems to be alluding to the fact that they think online-distribution of HD content is the way to go. But, as this blog on PCWorld.com points out, that method still has a long way to go and is still too frustrating for users. I second this opinion.

VICTOR UPDATE: I think Microsoft almost certainly WILL NOT offer a Blu-ray drive for the Xbox 360. What's the point? By time the drive would come out -- probably right before Christmas -- the 360 would be celebrating its third birthday. In other words, assuming the 360 follows the standard five-year console lifecycle, the machine will be closer to the end of its life than the beginning by the time Microsoft could get a Blu-ray attachment to market.

So Microsoft is almost certainly going to just wait for the 360's successor to come out, and then include a built-in Blu-ray drive for games and movies. Bet on it.