After the successful launch of its new gaming console, Xbox 360, Microsoft is in a dilemma. Better said, the company doesn't know if the Xbox 360 console will get in 2006 an HD DVD optical unit upgrade. If Xbox would have a HD DVD unit, users would watch movies directly form the console in the new format, but the software giant is said no to launch games on the HD DVD support.

Various Internet publications claim that Microsoft will not launch games on HD DVD discs, although its next operating system, Windows Vista, will support this format. Other sources state that the Microsoft Japan officials suggested that HD DVD will be present in the next generation of Xbox 360, but only for movie playback. Moreover, it seems that Microsoft went to a final stage of negotiations with Toshiba for a HD DVD compatible gaming console. This new console is expected in the second half of 2006, according to rumors.

Almost a month ago, Sony announced that PlayStation 3, its third generation gaming console, will support the Blu-ray disc format. Seems that Microsoft spotted the disadvantage it could have its Xbox 360 when PS3 (PlayStation 3) will launch on the market, in the first half of 2006. If one of the major backers of HD DVD, Microsoft, won't support HD DVD in the Xbox 360 gaming console, the software giant will have major difficulties in its market conquering plans. Also, it is less likely that the HD DVD will be adopted by users if it's not embedded in the Xbox 360, and Sony might win, embedding the Blu-ray technology in the PlayStation 3.

Analyzing the situation, Microsoft entered first in the third generation gaming console market, outrunning Sony and also trying to catch up with the popularity of the other console.

But Sony will introduce early next year a gaming console that will support Blu-ray, adding more functionality that the users will more than likely enjoy, receiving more features at the same price. And if Microsoft will be late on upgrading its Xbox 360, the company will lose ground on the market, even if it had launched the console before Sony.