I completely agree with Microsoft. Currently there is no standard for HDMI. The signals are not the same for each piece of technology. Until then HDMI won't work 100% and actually comes out looking like trash because of that. Believe it or not HDMI is not the way to go right now. The technology is in infancy and component is still better. Even HDTVs still run mostly off analog signals. Even DVI connections to an HDTV are less vibrant than a component connection. So until there is a true standard and HDMI 4.0 is developed then we won't have anything real. We are currently at HDMI 2.0 with no standard so every company is developing HDMI different. So MS is right. Until HDMI has a standard and gets developed into all electronics, which will be around 2008, we don't have any reason to rely on HDMI.

Of course it's a risky investment, but take note of what PocketDragon said.

You seem to have missed the point. The key phrase was "in this generation of console". Meaning that by the time it's needed (much like higher capacity optical drives) there will be a new generation of system, at least from Microsoft. Kind of like "just in time" inventory.