It looks like Microsoft will release a Blu-Ray drive for the 360 after all.
It's important for MS to do this because a number of people we personally know are thinking of buying a PS3 because it is the best BR player out there. I don't like BR or the heavy Java implementation, but in terms of the console wars, MS is leaving the door open for Sony until it releases this player. The best thing for them would be to release the player for cheap so people buy it and then realize that they watch all their media via streaming Netflix. In fact, timing the BR player with the new dashboard update would be great, since they don't really want to make that big a deal of announcing it.
Just in time for Netflix to start charging extra for Blur-Ray rentals.