With the HD DVD format going the way of the dodo this weekend a lot of people (myself included) have come to the conclusion that Microsoft will be rolling out a Blu Ray player some time in the near future. It turns out it's not as simple as first thought and MS blogger Chris Lainier has detailed
all the reasons why we won't be seeing Blu Ray on the Xbox 360 any time soon. The biggest stumbling block seems to be that Microsoft would have to add a Java component to the Xbox 360 to support the BD-J interactivity layer in the Blu Ray spec. There is also the matter of adding in new DRM to the device to support the format and it doesn't look like Microsoft is willing to do that either.
It's not like either of these obstacles can be over come but more like whether or not Microsoft is going to swallow their pride and make the changes to the platform. These are fairly large architectural changes and I'm not sure Microsoft is going to be willing to make these changes halfway through the systems life cycle.