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Microsoft is going up-market with its Xbox 360 gaming console, unveiling the Xbox 360 Elite. At $479 the Elite is clad in black, which undoubtedly looks trick, adds an HDMI interface, and sticks a thumb in Sony's eye with a 120GB removable hard drive. The $299 Xbox 360 basic (like the $499 Sony PS3) features a 20GB hard drive. There is no integrated HD DVD drive, which means that having an Xbox 360 Elite and HD DVD playback is now $679, just about 80 bucks more than the $599 Sony PS3, which is a full-on Blu-ray Disc player. And even more curiously, Microsoft isn't including integrated Wi-Fi, which is a huge plus for the $599 (60GB hard drive) version of the PS3.

The decision for Microsoft to go upscale and seemingly take Sony on again is curious given that the Wii has been outselling both the PS3 and the Xbox 360 by significant margins. Are these two companies so focused on beating each other that Nintendo's little $250 dark horse will outsell both? And the pricing makes me chuckle a little. Back when the PS3 was announced some mainstream pundits thought it a death knell that the console would sell for $499-$599, which was deemed too expensive in spite of the millions of $400 iPods that have been flying off Apple's shelves. Now Microsoft is showing that its consoles obviously weren't expensive enough!

At this point I'm waiting on Micrsoft to get back to me on some specifics. While HDMI obviously ups the ante I don't yet know if it's HDMI 1.2 or HDMI 1.3, what flavor of 1080p video will be carried over HDMI (1080p/24 or 1080p/60 only?), or if full resolution Dolby TrueHD decoding will be included. Stay tuned.

For those keeping score, the $599 PS3 comes in with a smaller (60GB) hard drive, integrated Wi-fi and Blu-ray playback, HDMI 1.3, 1080p/60 output and Dolby TrueHD decoding.