Upside: At a combined cost of $500 to $600, the Xbox 360 and HD-DVD represent a terrific bundled value. For the price of an entry-level HD-DVD player--the Toshiba HD-A1-- you can get a next-gen gaming console and an HD-DVD disc player. Making the HD-DVD drive external just makes good business sense for Microsoft. Unlike the upcoming PlayStation 3, the addition of the next-gen movie player is completely optional, meaning that gamers can play high-def games for a few hundred dollars less, or watch high-def movies for the same price. The Xbox 360 will also be the first player to output HD-DVDs in 1080p, though only via VGA; the highest component resolution is 1080i.

Downside: The Xbox 360's HD-DVD drive does not feature an HDMI output, which leads to a few potential problems. Your only hope of using the HD-DVD drive to watch 1080p is if your HDTV has a VGA input and the ability to display the resolution therefrom. Additionally, movie studios can program discs to display at lower resolution when displayed via component-video outputs, which could render the Xbox 360 HD-DVD drive almost useless for many consumers. On top of the anxiety of picking a player, there's still the looming uncertainty of the format war. While the HD-DVD library grows every week, the amount of top-tier titles in high-def is still pretty paltry, and studios remain split between supporting it and Blu-ray, with few of them providing films in both formats.