Digital Trends: Optical HD Battle May Be Over: HD DVD Wins

[Ruined]

Optical HD Battle May Be Over: HD-DVD Wins

Nearly a year and a half ago I wrote a column saying that Blu-Ray wins or nothing does. This showcases the reality of doing predictions because while the analysis held up, events did not pan out as anticipated and by any current measure HD-DVD will end this year with a decisive win.

The basis for the prediction, which did accurately point out that Sony’s win here might actually cost them more than a loss, was the PS3 and the forecast volumes for that product. Back in August of 2005 we did know that HD-DVD, which used DVD production technology, would be easier to bring to market but it simply did not seem reasonable that Sony would put their PlayStation franchise at risk for anything but a technology they were absolutely certain they could bring to market on time.

That turned out to be incorrect. The problems with Blu-Ray have created extreme cost and execution problems for Sony and now their premier division (instead of being the profit center for Sony) is predicting they will take a $1.5B loss next year largely resulting from this decision. To put this in perspective, just think what would happen if Apple’s iPod group, instead of generating massive profit, suddenly dropped into massive loss. Now you can see why the Sony PlayStation division just changed out their top executives.

Why HD-DVD is Wining

When you talk to either the HD-DVD or the Blu-Ray camp you get the sense that neither actually watches movies much. Both cite features as the reason why folks will pick one or the other. Yes there is a lame shooting game in League of Extraordinary Gentlemen (Blu-Ray) and there are a ton of things you can do interactively in HD-DVD (including changing car colors in one scene in The Fast and Furious III: Tokyo Drift). But the movie market moves on quality of movie, price of player, and price and availability of media.

At launch HD-DVD players were about half the price of Blu-Ray players and the movie price for HD-DVD is generally running about $5 less. In addition, many of the new HD-DVD movies also have regular DVD side which means that buyers, most of which will have both HD-DVD and DVD decks, will get better value with HD-DVD than with Blu-Ray – that’s the theory anyways.

All that being said, the killing blow may have been done by Microsoft who decided to bring to market a $200 HD-DVD option for their Xbox 360 which has been in market a year longer than Sony and is projected to have a near 20x installed base advantage by year end (10M Xbox 360 to 600K PS3). Note that both projections are aggressive but Sony was supposed to originally ship 2M PS3s into the market during the 4th quarter and actual numbers (given they had under 200K at launch) may be closer to 400K. And with a recall possible there is a chance they might not even make that. Add to this that the Xbox 360 HD-DVD drive is for movies only, so each one counts for movie viewing while PS3s may not be used to watch movies and you have a situation where the active movie player advantage by year-end should be between 4x and 6x better for HD-DVD over Blu-Ray.

Finally, HP who had been a big Blu-Ray supporter and dominates the Media Center PC market, introduced a $100 HD-DVD upgrade for their PCs (Sony’s Blu-Ray VIAO solution was just dropped to $749). The impact of this last move is still too early to measure but there is no comparably priced (not even close) solution using Blu-Ray.

If you go to Amazon and look you can see HD-DVDs are solidly ahead and this is before the impact of either the Microsoft or the HP moves, many of which won’t be opened until Christmas or haven’t yet been shipped (HP).

Now Sony will stick with a technology for years after the market has decided on another path and they do have some very strong supporters which include Dell, Apple, and Disney. Dell traditionally has been the PC bellwether company, Apple has the most loyal customer base, and Disney is the only Studio that people ask for by name. So these folks, particularly Sony, could drag this on for years. But if that is the case not only will many in the industry not make money, Sony will probably lose the most because they are still the ones doing the heavy lifting (In addition, after the battery problems, neither Dell nor Apple is as close to Sony as they had been).

Right now it appears impossible for Blu-Ray to gain a substantial lead on HD-DVD, even after massive investment, they likely could only close the gap. If the HD market depends on the emergence of one as a standard and Blu-Ray no longer has a chance to be that standard, how long will it be before the Blu-Ray supporters follow HP and switch sides?

Do You Want One Standard?

Now you can evidently help drive this if you are so inclined. There is a petition that has been set up for you to voice your support if you believe that there should be only one and HD-DVD is that one. You can find the petition here . Evidently they had collected 2,300 signatures at the time of this writing.

The petition was put together by HD NOW where the folks have collected a rather interesting list of supporting material which goes far farther than I have on supporting the conclusion that we’ve prematurely crossed over to the point where HD-DVD has won the High Definition DVD competition.

Does Blu-Ray Die?

Blu-Ray has substantial storage capacity advantages for data and could survive as a high capacity personal computer storage medium. While expensive, one non-Sony vendor’s upcoming Blu-Ray laptop solution costs around $800 on top of a $3000 notebook but it gives that product an unmatched removable media capability. But this is a vastly better storage solution for a high-end PC it isn’t a high volume high definition movie watching solution.

So BluRay could indeed survive but probably not for movies only for PS3 games and high-end optical backup. The real question is does the PS3 survive or whether there will ever be a PS4. Some are saying that the PS3 is in deep trouble and some are saying the PS4 will never arrive with massive game defections from PS3 to Xbox.

Wrapping Up

The market wants one solution for High Definition video and we are already starting to see high definition downloads through services like Xbox live. Apple’s iTV is expected to go even further when it launches early next year. It may actually be too late for either of these platforms to move; if folks move aggressively to downloads for high definition content and if High Definition pay per view cable offerings continue to improve, even if I’m correct and HD-DVD has won, it may have actually prevailed too late in the process to survive for long.

Be that as it may, with a 4x to 6x advantage by year end, you’d have to conclude that HD-DVD has reached a point where it can’t lose and Blu-Ray is only now in a position to ensure both platforms lose. That last option still appears most likely if the market doesn’t move aggressively to one HD platform.

http://news.digitaltrends.com/talkback158.html

The author believes that Blu-Ray has no hope of "winning" and at best can make both formats lose. Gotta love Sony.

 

[INKster]

So, Sony, Panasonic, Philips, Pioneer, Samsung, Sharp, Mitsubishi, Hitachi and LG (among others) are all wrong, then...

This article is way too biased for my taste, not to mention very premature.
It basically hands the crown to an external add-on for a console, just because it's the cheapest right now and works with Windows.
Since when did the PC market determined the winner of the next Consumer Electronics video format ?
How long have both formats been on the market ?
I've first heard of the word "DVD" (had heard "AOD" before that) back in 1995, and it didn't really "catch" until mid-1999.
If i'm not mistaken, the PS2 wasn't the cheapest (and was, by far, a very poor unit, feature-wise) DVD player in the market around its debut.

Why don't we wait a year or two before going with another "analyst's" opinion, ok ?

 

[Graham]

When you talk to either the HD-DVD or the Blu-Ray camp you get the sense that neither actually watches movies much. Both cite features as the reason why folks will pick one or the other.

I like that it's very true

What is this about a possible recall?


I want hard numbers on the 360s hd-dvd drive sales.

It brings up an interesting point with HP, as I wouldn't underestimate the HP $100 HD-DVD drive upgrade. The competition between HP, Dell and Apple is fierce, and if Apple/Dell are in a position where they suddenly can not price match a significant upgrade with their competitor, the strain may start to show.

Since when did the PC market determined the winner of the next Consumer Electronics video format ?

However the PC has changed since the last major war, we now have media centre PCs, etc.

 

[Dave Baumann]

Finally, HP who had been a big Blu-Ray supporter and dominates the Media Center PC market, introduced a $100 HD-DVD upgrade for their PCs (Sony’s Blu-Ray VIAO solution was just dropped to $749). The impact of this last move is still too early to measure but there is no comparably priced (not even close) solution using Blu-Ray.

It'll be interesting to see how this element pans out. As it points out Dell have supported Blu Ray, however PC vendors are alwasy going to be cost concious. HP (who have also recently overtaken Dell in sales volumes) is currently able to tout the benefits of "HD" and if HD DVD turns out to be significantly cheaper than Blu Ray then they are going to have a pricing advantage as well.

[Edit] Evidently Graham had a similar line of thought as I was typing this post!

 

[Skrying]

Also consoles are a much larger factor then previous generation. Todays consoles play a big role as a entertainment device beyond gaming. This is why the HD DVD addon for the 360 is a big deal.

 

[INKster]

However the PC has changed since the last major war, we now have media centre PCs, etc.

It would be interesting to compare sales of Media Center PC's to the number of CE standalone DVD players/recorders/Tivo's sold.

Let's not forget that the CE market enjoys a much higher profit margin, and the majority of DVD's is still playing on living-room equipment.
The PC is a bulky and somewhat awkward box to have in most home theaters.
It's still a "geek thing" for now.

 

[Skrying]

It would be interesting to compare sales of Media Center PC's to the number of CE standalone DVD players/recorders/Tivo's sold.

Let's not forget that the CE market enjoys a much higher profit margin, and the majority of DVD's is still playing on living-room equipment.
The PC is a bulky and somewhat awkward box to have in most home theaters.
It's still a "geek thing" for now.

When was the last time you looked at a PC? '95? Lol!

System's such as Moneul's offerings or Niveu's systems are just simply beautiful and are right at home in a persons entertainment center. These are far from awkward.

Also, you're talking about an entirely different price bracket. CE DVD players go fast because they're $30 and hooked up to 480i TV's, you simply do not find that in a person's setup going for a HDTV, they'll spend the money to get it right, and that doesn't mean a lot of money either, you can get a lot of entertainment PC for $1500.

EDIT: Also, HTPC.... as in used in the living room/entertainment room.

 

[INKster]

When was the last time you looked at a PC? '95? Lol!

System's such as Moneul's offerings or Niveu's systems are just simply beautiful and are right at home in a persons entertainment center. These are far from awkward.

Also, you're talking about an entirely different price bracket. CE DVD players go fast because they're $30 and hooked up to 480i TV's, you simply do not find that in a person's setup going for a HDTV, they'll spend the money to get it right, and that doesn't mean a lot of money either, you can get a lot of entertainment PC for $1500.

EDIT: Also, HTPC.... as in used in the living room/entertainment room.

I've become well aware of those enclosures, because i happen to own one.
And i still say, they are too expensive and bulky for the standard living room PC.
Those enclosures are used for Tivo/PVR-like functions, not HD-DVD or Blu-ray disc playing.
HT enthusiasts don't determine the success of a format, because the price of said setups prevents them of becoming high-volume.
It's a niche market.

Also, most GPU's are not yet HDCP capable, so the average "joe sixpack" could be buying something that can't even play HD-DVD's or Blu-ray's from the get-go.
How many of them can actually find and change to a suitable graphics card ?
Will they even bother ?

 

[Skrying]

Joe sixpack doesn't care about HDTV's at this point. Or at least all he cares about his the large size of his TV and the fact that he's still watching 480i from his cable.

HD DVD/Blu Ray has a very long time to go, but its full success in the entertainment market will be largely effected by its start. If the "niche" markets jump on one format early then movie studios will move towards that format. Word of mouth is the most powerful marketing tool of all, and that's why even this early on the number of sells to those markets is very important.

 

[INKster]

Joe sixpack doesn't care about HDTV's at this point. Or at least all he cares about his the large size of his TV and the fact that he's still watching 480i from his cable.

And the circle completes.
The "good-enough" argument for DVD's will keep both HD-DVD and Blu-ray out of consideration for most buyers for a long time, especially so when an HDTV is required to see any benefit of them.

So, if it takes a long time to grow a critical mass, it's way to premature to declare any of them the winner.
It may even be neither, for all we know.

 

[Skrying]

And the circle completes.
The "good-enough" argument for DVD's will keep both HD-DVD and Blu-ray out of consideration for most buyers for a long time, especially so when an HDTV is required to see any benefit of them.

So, if it takes a long time to grow a critical mass, it's way to premature to declare any of them the winner.
It may even be neither, for all we know.

You seem to miss the second part of my response. Exactly the fact why those niche markets matter those. Since Joe Sixpack has no effect on todays standings the niche markets are the ones who will carve out a early stance.

I'm curious myself as to if anyone is buying the HD DVD/DVD hybrid discs and just using the DVD side for now and plan to upgrade to HD later on and no have to re-buy the movie.

 

[INKster]

You seem to miss the second part of my response. Exactly the fact why those niche markets matter those. Since Joe Sixpack has no effect on todays standings the niche markets are the ones who will carve out a early stance.

I'm curious myself as to if anyone is buying the HD DVD/DVD hybrid discs and just using the DVD side for now and plan to upgrade to HD later on and no have to re-buy the movie.

Depends of how much that movie will cost later on a Native HD format, versus buying a cheap version today.
How can we say the DVD portions of those HD-DVD's are not treated like an extra, adding to the cost of the title ?
The cost differential may not compensate.

Besides, what's stopping Sony from having the very same dual-format BD/DVD strategy ?
They have most Hollywood movie studios backing them up (including their own), and the Blu-ray hardware infrastructure can support DVD movies too.

Next thing we know, it will be the p0rn industry declaring the winner once again (they did so with VHS, all those years ago).

 

[jamesnmandy]

i do actually agree with most of this analysis as i consider myself to be "an average six pack joe", or does owning a HDTV and Xbox 360 instantly count me out of that running ? or maybe the fact that after my Toshiba Upconverting DVD player died, i found that the movie playback on the 360 in conjunction with the functionality of the media remote was superb and more than adequate, so the HD-DVD drive is a natural progression for me

i am wondering what ever happened to that combination player that was proposed by Samsung, the HD-DVD/Bluray combo player? i am fairly certain the BluRay camp made licensing quite difficult and expensive as they saw this as an admission of being somehow an "equal", the availability of a combo drive as such would basically destroy BluRay as a movie format and would certainly force Sony to push the data storage capabilities

i wholeheartedly agree about the question as to how much time both sides actually spend watching the movies, in terms of movie playback, which is what will mean the most to the "average six pack joe", the implications of such a drive at an affordable price point would be tremendous, because to the author's point, if i inferred correctly, there is really zero difference in movie playback quality/features between the two, the average guy could care less that that BluRay disc he popped into the player is capable of storing 50Gb's of data on a PC, all he knows is it gives him the most enjoyable experience on his new HDTV, that and the ability to get one at Wally World for something resembling a reasonable price to boot

look at the DVD market, of all the people i know that own a DVD player, maybe 5% of them actually use the data functionality of it in a PC environment, okay, maybe 10%, that's stretching it, but basically everybody owns a DVD player, while very few in comparison use DVD's for data storage, when an average joe that drives the market hears the acronym "DVD" they instantly think "movie", not "OMG, i can store 5 gazillion files on one" so obviously with combined use storage medium, the movie playback ability and price are the determining factors as far as market saturation/penetration is concerned

i was once a supporter of BluRay actually, and haven't lost hope just yet, but things certainly dont look good at the moment, i do agree that all things considered, HD-DVD does seem to be the dominant species

i think Sony needs to do the right thing, if for no other reason than to bolster sales and reputation, and get the Sony brand back in the face of the consumers (other than gamers), and come to an agreement with Toshiba and the other OEM's to allow affordable combination players to come to market and i mean fast.......because everybody will win if we can go buy a $300-$400 HD-DVD/BluRay/DVD player at Best Buy.....BluRay may not end up being the "supreme being" that Sony and others wanted it to be, and that is possibly could have been had things gone differently, but at least it won't become another Betamax, which is what i fear is coming

 

[RobertR1]

The HD DVD add-on really works out in the end. Firstly, I don't expect the add-on to be a seller many years down the road. It's a nice stop gap though.

The A/V enthusiasts will get their stand alone players and a lot more than normal jumped on the HD-A1 due to it's cheaper price. The next obvious market was the gaming enthusiast. For people with a Xbox 360, they really do look at it as a "$200 HD DVD player" not a combined over all pricepoint. It's a psychological thing. The usage of the HD DVD with a PC takes care of the HTPC enthusiast crowd.

More importnatly, it lets MS know of consumer interest in HD DVD and how much focus they should put into it from a software perspective. Even the most die hard Blu Ray will admit that MS has done a great job with VC-1 and HDi (HD DVD interactivity layer) to date. Seeing HD DVD doing good will only push them harder.

Now the question remains, will we see a new SKU with built in HD DVD? My take is no. The add on can have a decent shelf life. The main goal during that span should be to bring down the price of the standalone players. So in a year from now if the HD DVD built in SKU costs $399 but stand alone players are down to $250 then the stand alone player will win majority of the time with the mass consumer. Instead MS has to take on the costs involved with a new SKU and they will simply sell less units at $399 than say the current premium at $299 or $249. Price is king in the end. I say keep the add-on running and promote it well. Once it's time is up and stand alone player have dropped in price to be a vialbe option for mass consumers, the add-on will have done it's job.

For Blu Ray, get your damn prices down!!!!!!! I can't say this enough. And no, the PS3 is not *the* answer. You need a sub $500 player and keep on lowering that number. Having $1000+ players only for a long time will pretty much make you inaccessible to the mass consumer market. Will the PS3 help? Sure but it's benefits will be washed by the 360 add on and the much cheaper entry level Toshiba HD DVD player.

 

[Rolf N]

It would be so wrong if HD-DVD wins.
As pointed out elsewhere, HD-DVD is the the smaller leap that saves device manufacturers a couple of cents per unit. Stamper operators save one-time expenses for refitting the lines. Disc manufacturing cost is another couple of cents per unit less because there's no hardcoating. In return for cheering that bag of skimping up and wishing the HD-DVD camp a victory, you'll get the exact same codecs, equivalent interactivity and less storage capacity, i.e. less return for the investment required to rebuild your movie library.

That's the cold, hard technical truth. There's no technical reason why an HD-DVD player should perform better in any area or be cheaper than a BR player. It's digital storage with equal codecs => potentially equal software and equal circuitry => potentially equal devices with different physical storage media. Coincidencental, anecdotal differences in device quality and price will go away and all that remains will be the smaller capacity of HD-DVD [strike]and the hybrid discs with even less capacity[/strike].
The wrong format might win. The PR is in motion. Could happen as it happened before. That doesn't mean it's worthy of applause.

Re the article, that guy should show some sales numbers before calling wins. AFAIK Microsoft hasn't been very good at disclosing absolute sales figures, and there's just nothing there right now to make the article appear valid. Or is there?
And I'd like to point out that he calls a win for 2006, which is notably different to the sensationalist headline used in the OP. *pouts*

 

[RobertR1]

It would be so wrong if HD-DVD wins.
As pointed out elsewhere, HD-DVD is the the smaller leap that saves device manufacturers a couple of cents per unit. Stamper operators save one-time expenses for refitting the lines. Disc manufacturing cost is another couple of cents per unit less because there's no hardcoating. In return for cheering that bag of skimping up and wishing the HD-DVD camp a victory, you'll get the exact same codecs, equivalent interactivity and less storage capacity, i.e. less return for the investment required to rebuild your movie library.

That's the cold, hard technical truth. There's no technical reason why an HD-DVD player should perform better in any area or be cheaper than a BR player. It's digital storage with equal codecs => potentially equal software and equal circuitry => potentially equal devices with different physical storage media. Coincidencental, anecdotal differences in device quality and price will go away and all that remains will be the smaller capacity of HD-DVD and the hybrid discs with even less capacity.
The wrong format might win. The PR is in motion. Could happen as it happened before. That doesn't mean it's worthy of applause.

Re the article, that guy should show some sales numbers before calling wins. AFAIK Microsoft hasn't been very good at disclosing absolute sales figures, and there's just nothing there right now to make the article appear valid. Or is there?
And I'd like to point out that he calls a win for 2006, which is notably different to the sensationalist headline used in the OP. *pouts*

All the newer combo's are HD30/DVD9 so I'm not sure where the "hybrid discs with even less capacity" came from........

Consumers want cheap with decent > good quality, not the best of the best. If that was the case we'd all be listening to SACD's and DVD-A's instead of MP3's.

You use "potentinally" a bit too much. The differences are there. The BD spec has lower tolerances in manufacturing. We still can't get any word on cycle times and outside of Sony no one can produce BD50's.

HD DVD can clearly deliver with VC-1 and HD30. Even on longer movies it's fine. Quick examples being Batman Begins and King Kong. Blu Ray's super tech isn't needed with advanced codecs that continue to mature at a rapid rate. If we were stuck with Mpeg2, I'd back you all the way but we're not.

The side that can lower their prices faster will likely win.

 

[Graham]

Having another think.... Ok bear with me...

The first of the two formats that get support into a entry level system, where (and this is the tricky bit) the support is not the selling-point, then that side wins. If they can convince consumers to buy their product without feeling like they are paying extra for something they may not use, then thats when the battle is won or lost... This is where the $100 HP upgrade starts to come in. One year from now, whats to say you won't see entry level HD-DVD compatible drives for a $50 premium? Or BluRay.?
It's at that point they move out from being 'videophile' (argh I hate 'phile' words!) products to being mass market. All because of the word 'compatible'

The HD-DVD name may well help here too. If 'joe six pack' ;P has to ask 'hey, can this Bluray player do DVDs too?' you have a problem. Which is exactly why I think each needs to be a value-add not the defining feature.

It's like if the 360 or PS3 were advertised only as high def game machines... Which for the majority of their users isn't the selling point.

 

[Arwin]

It's a bit early for all this, imho. A few points here. The battle hasn't even begun outside of the U.S., where you can just barely start buying stuff. The same goes for the HD console war, which is just kicking off. The HD-DVD player for the 360 also isn't available in Europe yet, and HD tvs and TV broadcasting is just starting. T,he BluRay burner has been out for quite a while now and has proven to be very stable and mature. And the HD DVD add-on for the 360 may be overplayed - every PS3 sold will have BluRay built in, but not every 360 is going to have the HD DVD as an add-on, and it isn't the most elegant of solutions in the first place (not helped either with the 360 not being the quietest of devices). It will help in the short term, though, no doubt.

These standards take a long time to establish themselves. I think it will take several years before we can start telling which standard is going to win.

As for personal preference, to me big points for BluRay are having space for HD extras, something we have already seen in some movies, and which I think is a big plus, as well as having extra space for movies in general - one of my preferred genres are series on DVD, and that's just going to really benefit from BluRay - a 5 disc series on HD DVD will take just 3 on BluRay, for instance, and also the BluRay burner being mature at this point so you are certain that you're not going to get the whole DVD+/- mess.

I like the DVD9 solution of HD DVD, but we'll have to wait and see whether BluRay will pull that off soon enough also, or whether that even matters.

The whole format war may take a long while, especially if one format becomes dominant in one region, and another in another region.

This article reminds me a lot of articles preceding, with reviewers constantly flip-flopping. First, BluRay was 'it', then HD DVD was sooner to market with better quality, then BluRay caught up again and had the future again, then HD DVD gets the vote again, but few articles at any point in time agree with each other, which just shows me that it's too early to tell.

 

[Rolf N]

All the newer combo's are HD30/DVD9 so I'm not sure where the "hybrid discs with even less capacity" came from........

That puzzled me for a bit, but you mean double-sided discs that can be flipped over, right?
Forgot about those, even though I have one (Payback pure DVD but in two aspect ratios or something). I'll edit that.

Consumers want cheap with decent > good quality, not the best of the best. If that was the case we'd all be listening to SACD's and DVD-A's instead of MP3's.

There is a market for higher resolution (HD video) but not necessarily for formats that exceed the limitations of human perception. VC1 is a lossy codec just as MP3 is a lossy codec, both exploit imperfections in our ability to percept. SACD and DVDA OTOH are just a crazy gimmicks. Bats and cats might benefit but they don't buy music AFAIK

Re cheap: it's a freaking optic lens a few mm in diameter per player plus a hard-coating per disc. Even the infamous blue laser diode is shared. Relative costs on the two formats will depend on volumes more than anything else.

You use "potentinally" a bit too much. The differences are there. The BD spec has lower tolerances in manufacturing. We still can't get any word on cycle times and outside of Sony no one can produce BD50's.

Yeah I use it but why too much? There's a different lens in a BR player, so that it can focus properly on the disc, and the interactivity layer is different, so there needs to be different software to handle that. The rest is equal. Player manufacturers can do the rest equally well for both formats if they want to. If a VC1 encoding of a particular movie is put bit-identically on an HD-DVD and a BD with just different menus, why would anyone expect any of the two to be better? That can only happen when the decoding quality is different between the players, but there's simply no connection to the physical storage medium. No, I don't think I'm overusing anything here.

It's tragic irony that the first retail BR player was so bad. It also was a mistake to release MPEG2 encoded BR movies so early, while everyone is still on the fence and closely watching the moves.

HD DVD can clearly deliver with VC-1 and HD30. Even on longer movies it's fine. Quick examples being Batman Begins and King Kong. Blu Ray's super tech isn't needed with advanced codecs that continue to mature at a rapid rate. If we were stuck with Mpeg2, I'd back you all the way but we're not.

Maybe enough is enough, and for 2 hour movies even a single-layer HD-DVD should be enough to deliver brilliant quality, so yeah. My point was that the extra headroom is worth "throwing away" the few pennies it really would take, be it for TV shows, higher resolutions and/or plain avoiding dual-layer discs (=price? No idea how that stacks up though).

[ot]
It just befuddles me how a mature industry can be so fragmented and deliberately anti-progressive, like with the whole DVD+R, -R +-RW whatever business, or the stupid lazy skimpers in the memory industry who have refused to change the module PCBs since the SDRAM days, just to avoid one-time retooling costs etc.
[/ot]

Sometimes I pause and wonder if many of those battles are just agreed upon, orchestrated and planned, simply to stir up some interest.

The side that can lower their prices faster will likely win.

Yeah, probably.

 

[Pete]

I have to say that while I still think HD-DVD makes more sense just b/c it's good enough and seems a lot cheaper to switch to, at least in its expected initial (first five yrs?) volume, that editorial gets two big things wrong.

That turned out to be incorrect. The problems with Blu-Ray have created extreme cost and execution problems for Sony and now their premier division (instead of being the profit center for Sony) is predicting they will take a $1.5B loss next year largely resulting from this decision. To put this in perspective, just think what would happen if Apple’s iPod group, instead of generating massive profit, suddenly dropped into massive loss. Now you can see why the Sony PlayStation division just changed out their top executives.

Since when is PlayStation's business model comparable to the Ipod's? In fact, they seem to be opposing models: Sony makes most (all? I don't know if later hardware profitability covers initial losses) of its money on the blades, while Apple makes most of its money on the razors.

All that being said, the killing blow may have been done by Microsoft who decided to bring to market a $200 HD-DVD option for their Xbox 360 which has been in market a year longer than Sony and is projected to have a near 20x installed base advantage by year end (10M Xbox 360 to 600K PS3). Note that both projections are aggressive but Sony was supposed to originally ship 2M PS3s into the market during the 4th quarter and actual numbers (given they had under 200K at launch) may be closer to 400K. And with a recall possible there is a chance they might not even make that. Add to this that the Xbox 360 HD-DVD drive is for movies only, so each one counts for movie viewing while PS3s may not be used to watch movies and you have a situation where the active movie player advantage by year-end should be between 4x and 6x better for HD-DVD over Blu-Ray.

How did we get from 10M 360s to 1.6-2.4M HD-DVD addons? Do we have any sales data on the add-on? And does he honestly think the 360 will maintain a ~20x lead on the PS3 indefinitely?

That said, it does seem pretty big that HP'll offer HD-DVD for $100. (Moreso than MS offering it for $200, IMO, b/c that's on top of the 360's price and brings it pretty even with the PS3's. I'm guessing we'll see a 360 price drop in '07, though, which should make the 360 HD-DVD option more interesting.) And HD-DVD does seem to be winning in current marketshare and pricing. I agree that whoever gets close to impulse-buy pricing wins, especially if Joe Sixpack can add an HD player to his store-subsidized two-years-no-interest HDTV purchase for not much more than an upconverting DVD player.

What Toshiba should do is to get HD-DVD into one of those combo player-receiver-speaker packages. There's gotta be enough headroom in the speaker prices to soften the HD-DVD player's price premium, and it's an interesting alternative to becoming an integral part of a 360.