It is not like this is the first thing that M$ has ever backed that failed (Microsoft Bob comes to mind). Oh well, hopefully Blu-Ray will not flop as well due to the higher price. That would be a shame.
There is also the problem of the ever changing format of blu-ray, every time someone hacks the code (basically what css descramblers do to dvds) the firmware of all blu-ray players has to be updated with new code to get rid of the hack. This makes everyone’s blu-ray player somewhat obsolete for new movies (or reprints of old movies). Fortunately blu-ray discs are still being out sold by dvds, so this probably won’t be a problem for most people.
Oh ya, and Sony paid Warner 400 million dollars (unconfirmed) to take the side of blu-ray over HD-DVD.