If standalone players will sell for $500 and $800, then what's the absolute cheapest MS could sell the add-on for?
My guess is $149, and even $199 seems likely. $99 is impossible. Remember, unlike Sony and BluRay movies, MS doesn't see any royalties on HD-DVD movies--and if the strap-on drive stays movie only, then they'll never see a dime in royalties from its sales, period. Microsoft is done throwing money away, remember, so they need to keep it profitable somehow.
So...what happens when PS3 launches at $399? Or even, God forbid, $499? Sony still comes out ahead in the price wars--plus they have the more supported, (seemingly) more desirable format for movie playback.
If MS had packed in HD-DVD, they could have built a base for the format. This seems like Divx gone horribly worse.