Console add-on peripherals...remember Sega?
I was thinking about the assumption that Sega proved that console add-ons don't work. Along with that assumption comes the notion that "it has to be built in, or people won't touch it." This notion does hold some truth, but there are other factors I think get ignored. I'll share my situation:
I had a Genesis, SegaCD, and 32x. I got into the add-ons because I loved the Genesis, wanted to play more games, and wanted to see what the add-ons could do. Unfortunately, the add-ons proved disappointing. More specfically, the 32X was extremely disappointing, and the SegaCD was okay.
The benefits of the 32x weren't really that great. The graphics were improved, but not to the extent to justify the cost of the upgrade. Not to mention that there wasn't a very big selection of games for the 32x (carts or CDs). It left me feeling a bit cheated, because I had searched forever for a good deal on the upgrade.
As for the SegaCD, my feelings were a bit more positive. Full motion video was a nice change on a console....although it was extremely pixelated (*cough* Sewer Shark *cough*). The noticeable difference made me feel like it was a worthwhile purchase, but it wasn't the most exciting thing ever. I did end up with several great games that I played them often though.
One problem I could forsee even back then was for those who didn't have the add-ons. They were quite expensive, leaving them unavailable to many Genesis fans. That also left them unable to play many of the great games that came out for peripherals. But even if you had one peripheral you still may not be able to play a game without the other (like the 32xCD version of Night Trap). I'm sure that left for some confusion with many consumers. Some games were even produced in two different versions (per add-on), but they were supposed to be for the same console. I would hope we wouldn't see a repeat of this mistake.
In the end, I think the main problems were segregating your consumer and providing disappointing results. Sega didn't necessarily prove that all add-ons don't work; they proved that expensive "power" upgrades don't work. The idea of upgrading a console's power has merit, but it just cannot be done like it can with a PC (yet).
As long as an add-on doesn't make some games inaccessible to consumers that don't upgrade, yet it makes a worthwhile difference to those who do upgrade, the add-on could probably see some success. Features are one thing, but the ability to play games is another. As long as the standard console can play any game released for the system, it should be fine.
As far as Microsoft is concerned, the HD-DVD drive probably won't be an issue (it's just for movies). It's not required to play games, so it doesn't interfere with the game library, but it provides a feature that some people will want. So it cannot be lumped in with the SegaCD/32X type of add-on. That's not a fair comparison.
However, the Hard Drive is more likely to be an issue. As it seems, some games will require the hard drive. That leaves those who go the memory card route out of luck until they buy a hard drive if a game they want requires it.
Stepping back though, a hard drive is really a different type of upgrade. The benefit is obvious to about anyone: more storage space. Even the non-technical people know that a 20GB ipod holds more than a 1GB ipod. The question is, are any Xbox 360 consumers going to insist that they don't need a hard drive? Is there justification to say that a memory card is a permanent solution? It's hard to say, especially since in due time there will be lower priced options for this in the future.
Speculating is all we can do at this point. We really just need to see how well Bluray is perceived. If both formats fail, then the tables really turn on Sony. They would have to keep providing a Bluray player in their PS3s in order to allow the early adopters access to their early game purchases. Either that, or be the sole provider of Bluray discs and charge more for them. I guess we'll see what happens.