I'm really surprised people are defending MS here with the standard 'they're just trying to protect their business' spiel.
Datel saw a business opportunity, and a specific niche to target, and did so using an alternative technology that is cheaper both to manufacture and to sell to an end consumer, and MS are actively trying to force them out of competition so that a consumer is reliant purely on their own over-priced solution instead.
Would you all be defending MS if they lock out anything other than official 360 WiFi adapters? Or if you are forced to buy MS charge and play kits instead of regular rechargeable batteries? Or if you are forced to purchase MS produced A/V / HDMI cables in future?
This isn't a competitive move by MS (giving their own memory units an implicit superior capability or quality to justify the price, or reducing the price to stay competitive), it is a purely anti-competitive one.