But this year, Microsoft (MSFT ) Chairman Bill Gates III laid into Sony (SNE ) Chief Executive Howard Stringer, according to two sources, including one who witnessed the exchange in a private room.
Gates argued that Sony's new high-definition DVD standard, called Blu-ray, needed to be changed so it would work smoothly with personal computers running on Microsoft's Windows operating system. Stringer and two lieutenants defended the technology, insisting Blu-ray would work fine in PCs.
Yet Gates's ire only grew. "There must be something much deeper going on," Stringer said later, according to another person who heard the comment. A Microsoft spokesman acknowledges that Gates and Stringer talked at the conference, but says things did not become "heated."
Gates's efforts to derail Stringer's plans soon became public, though. On Sept. 27, Microsoft and Intel (INTC) fired a broadside at Sony, suggesting publicly the company's Blu-ray technology couldn't deliver what it promised, and they pledged their support for a rival technology from Toshiba (TOSBF ).
CRITICAL MASS. The news touched off a torrent of recriminations and finger-pointing. Several movie studios quickly voiced their support for Sony. Two major Chinese DVD makers backed the Toshiba standard, which is called HD DVD. And Dell (DELL ) and Hewlett-Packard (HPQ ) took the highly unusual step of issuing a joint statement denouncing the move by Microsoft and Intel, the PC makers' two most important suppliers. "Desperation" is the way Brian Zucker, a technology strategist at Dell, characterized Microsoft's move.
It may amount to little more than that. Despite the backing of the PC industry's two biggest titans, it looks as if HD DVD's days are numbered.
Sony is lining up strong support among Hollywood studios as well as other consumer-electronics companies.
Behind the brinkmanship lie two vastly different views of where entertainment in the home is heading. Microsoft and Intel paint a futuristic picture of the digital home, with sleek PCs powered by their software and chips in the central role. The PC would shuttle music, photos, and video from room to room—and grab off the Web everything from the latest Tom Cruise blockbuster to a National Public Radio podcast.
TRIPLE PLAY. Sony and its supporters are skittish about the latest movies being zipped around the house. Blu-ray disks can hold more content than today's DVDs, but they would be used in much the same way. The new disks would be plopped into a DVD player, and copyrighted material, like Hollywood movies, couldn't be ripped to a computer's hard drive without a studio's permission.
Blu-ray equipped devices are even designed to recognize and refuse to play pirated movies. Such protections are another big reason Sony has won the support of studios, such as News Corp.'s Fox (NWS ).