Wedbush Morgan analyst Michael Pachter has laid a sly broadside into Microsoft by claiming that their Xbox Elite is validation to Sony that their hi-definition strategy was the right course to take.

"Microsoft's move is an endorsement of high-definition output, and its inclusion of HDMI validates that Sony's initial strategy was correct", commented Pachter.

"The 120GB hard-drive is focused on helping the roll-out of IPTV, and I expect a progression of HDTV broadcast from the current 720p to the 1080p standard over the next few years, so the HDMI output will be relevant."

"On balance, this is a very smart move by Microsoft, but it appears to validate Sony's strategy, and serves as an acknowledgement that HD content matters", he concluded.

Also, some see the fact that Microsoft isn’t offering an external HD DVD drive as part of the new Elite bundle as a sign that it believes Blu-ray will eventually come out on top in the hi-definition format wars.

"It appears to me that Microsoft sees the writing on the wall – Blu-ray is going to win the format wars", he said.

"Ultimately, Microsoft will likely offer a Blu-ray drive with the 360 Elite, and I think consumers will be able to select based solely upon other drivers."