Microsoft has released the HD-DVD drive as an obvious counterstrike to the PS3's Blu-Ray capability, but the drive is much more than a bullet point in the console & format war.
PROS: The HD-DVD drive is quite simply the most efficient and cost-effective HD solution for those of us that already own XBOX 360s. However, even if you were to consider buying a 360 with the HD-DVD drive solely for movie watching, it is still very competetively priced compared to the stand-alone models. Adding to its value, the package includes Microsoft's Universal Remote, and a copy of King Kong on HD DVD. The picture and sound quality is superb, as advertised, almost identical to the quality produced from Toshiba's newer HD DVD model. Add all this to the fact that installation and operation is quick and seamless, with load times for discs quicker than that of the Toshiba. Finally, for those of you with super-nice TVs, at the time of release the XBox 360 HD DVD drive is the only HD source (apart from Blu-Ray) that is capable of outputting in 1080p (full HD), if you have a TV that will accept a native 1080p signal.
CONS: There is only one real 'con' that I can think of - the drive's lack of HDMI connectivity. Although you can view the stunning 1080i picture over the XBox's HD component cables, for (I believe) copyright protection reasons you can't output HD DVD picture over component, despite the cable's capability. Therefore, if you want to take full advantage of the drive's picture capabilities, you'll have to utilize the seperately-sold VGA HD cable ($39.99), and this will only work if you have an 1080p HD monitor with PC/VGA input. Even with this, on my TV (Samsung 1080p DLP), a little black box is drawn around the picture frame, which slightly reduces the picture size, despite the increadible quality. Also worth mentioning is that while the drive has the same upconversion cababilities as the other HD DVD & Blu-Ray models for standard DVDs, this too is only obtainable through use of the VGA cable. Finally, without HDMI, the drive can't make full use of the newest HD Dolby Digital & DTS surround audio tracks, instead downconverting to the standard DD & DTS tracks you're used to on standard DVDs (still good quality, though).
In conclusion, the drive is fantastic, a tremendous value. Although the capability range of the drive is limited through the lack of HDMI connectivity, for most people this isn't going to be an important factor. Most people, even those with nice HDTVs, don't have 1080p TVs or 7.1 channel audio receivers with HD decoding capabilities. Hopefully, though, Microsoft will eventually produce an HDMI port for the XBox, which will unleash the drive's potential. In the meantime, this wonderful, small HD DVD player will be more than sufficient for most everyone looking to step in to the world of True HD (even those of us that can currently get around the 1080p issue with an extra cable).