Today, Microsoft announced two blockbuster additions for the Xbox 360. First, the company will ship the Xbox 360's long-awaited HD DVD player add-on in November at a much-lower-than-expected $170 price point. Second, Microsoft will be adding true 1080p support--the highest-resolution HD format currently available--to the Xbox 360 through a free software update.

Microsoft's HD DVD drive was expected to ship in time for the upcoming holiday season, and although the company promised to price the unit competitively, few people suspected the drive would cost less than $200. In comparison, the cheapest standalone HD DVD player costs $500, and the cheapest Blu-ray unit costs a whopping $1000. (HD DVD and Blu-ray are currently competing to become the standard for next-generation DVDs.)

Microsoft will ship the HD DVD player add-on in Japan on November 22. Presumably, it will become available in North America and other worldwide markets around the same time, although Microsoft hasn't yet announced those plans. No doubt, the company intended the shipping announcement and the stunningly low price point to prop up lagging Xbox 360 sales in Japan, the only market in which Microsoft's next-generation console hasn't done well.

Consumers who purchase both an Xbox 360 (which already includes a standard DVD drive for games) and the HD DVD add-on will spend the same amount of money as those who purchase a Sony PlayStation 3, which includes an expensive integrated Blu-ray drive. With its next-generation optical-disk advantage gone, Sony has had to resort to a single technical area in which the PlayStation 3 outshines the Xbox 360: HD output. In addition to the standard definition, 720p, and 1080i HD resolution that the Xbox 360 offers, the PlayStation 3will offer true 1080p output.

But this week, Microsoft announced that even that advantage has been nullified. It turns out that the Xbox 360 hardware has always supported true 1080p, and beginning this fall, the software giant will enable that functionality by shipping a free software patch to Xbox 360 users over the Internet. This patch will let Xbox 360 users display all Xbox 360 games and DVD movies at true 1080p; currently, the Xbox 360's firmware limits the device to 720p and 1080i HD output, with downsampling for standard definition. Suddenly, the Xbox 360 appears to have no serious technical limitations when compared with Sony's overpriced and repeatedly delayed PlayStation 3, although the Xbox 360 still lacks a HDMI connection. (However, you could conceivably add an HDMI connection by using a new cable connection kit, should one be made available.)