Quote - Microsoft itself has little to gain from this, as they aren't the ones producing HD content

The story is not like this, Microsoft has very much to win.
The content providers wants DRM be implemented in home computers, but the Microsoft doesn't implement their DRM in the Windows, Microsoft implements his own DRM in the Windows that is not the same.
What has to win Microsoft is very much,  if Microsoft has success with his DRM he can tell the content providers, "Windows is now protected, if you want that your content be protected you must license our DRM and pay for our service", no money no protection.
The same happened with Microsoft internet servers, if you don't want Linux and want a Microsoft server is not enough to purchase the software from Microsoft, you must pay for the use of any feature of the servers.
Imagine the fortune that will make Microsoft if for any released DVD the content providers must pay something to Microsoft for their protection services!!!!

Quote - From their perspective, product activation was quite successful - they managed to cut down on casual copying, as well as make things at least a bit more difficult for the hackers and pirates,

Success?, activation-free XP appeared before the official release of XP!

Quote - And when you consider the sheer size of an HD-DVD movie, NOBODY is going to be trying to download one of those things - assuming that there is even someone out there with the hard drive space and bandwidth that they are willing to waste in order to share it.  Eventually that might change - I remember the days when downloading a single MP3 took half an hour (and you had to pray that your ISP didn't disconnect you - ahh the memories of dialup) - but I don't see over 8 GB of data ever becoming a trivial amount of data to download for a long time.

I agree, downloading 8 GB is not an easy task and you still have the risk to download some crap instead, but for what have so much trouble, you can buy it in the corner of the street for 2$ and of course DRM free. You even don't need to buy, is just enough to some yours friend have it  so you can make a copy, as the pirate DVDs are DRM free you can make the copy without any problem in Windows Vista itself!!!

Stupidity also evolves!