Microsoft Takes Sides in DVD-Format War

AP ^ | June 27, 2005

[ConservativeStatement]

TOKYO — In an expansion of their alliance, Microsoft (MSFT) and Toshiba said Monday they plan to develop high-definition DVD players together, cross-license technologies and cooperate in designing new models of mobile personal computers. The deal, announced by Microsoft Corp. Chairman Bill Gates (search) and Toshiba Corp. President Atsutoshi Nishida, is a big win for the HD-DVD (search) format in its competition against another technology called Blu-ray Disc (search), which is backed by Sony Corp. (SNE) and Apple Computer Inc. (AAPL), to become the world standard for next-generation of DVD players.

[Moral Hazard]

Blu-ray will win the format war because Sony will ship 10's of millions of Playstation 3s that will support the format before there are any significant HD-DVD player sales.

[TommyDale]

First company with a device that can play all of them will be the winner.

[N3WBI3]

tech ping?

[Paloma_55]

Anyone taking bets on who will win?

a) The better format
b) The bigger companies

Hint: Betamax

[ShadowAce]

[TommyDale]

Betamax? Matsushita wasn't exactly a small company when they came up with the VHS standard for their Panasonic and all the other brands.

[RayChuang88]

Matsushita wasn't exactly a small company when they came up with the VHS standard for their Panasonic and all the other brands.

So true. People forget that Matushita Electric is more than just consumer home entertainment electronics--they made a wide range of consumer home electrical goods, also. I'm sure many of you know of the Panasonic line of wet/dry electric shavers; in eastern Asia, Matsushita Electric is best-known for their very large line of rice cookers and hot water air pots sold under the National brand name (I have both, since Matsushita Electric does import them to the USA to surve the burgeoning market for ex-patriate Asians).

Because Matsushita owns JVC (who originally developed the Video Home System VCR format), it means VHS already had a powerhouse marketing group behind it when the format was introduced. Also, Matsushita was very smart to license VHS at very low cost, since that made it far easier to have more companies produce VHS machines than Sony's more restrictive licensing for the Beta format.

By the way, the whole issue of HD-DVD versus Blu-Ray could be a moot point, since when Blu-Ray hits the US market some time in 2006 it will use a disc that doesn't require a protective caddy like Blu-Ray discs now require. That means we will see optical drives that can play back both HD-DVD and Blu-Ray on the same drives and optical recorder drives that will do the same, also!

[SlowBoat407]

It's all about who can get it into more boxes more quickly, not about the better format. Witness Betamax and Apple, to name two.

Licensing the product for cloning is the key.

[G32]

HD-DVD doesn't hold a candle to Blu-ray. I really hope they can fix this issue.

[Bush2000]

Whether Sony ships Blu-Ray with PS3 is irrelevant. PS3 is a welded-shut console and it's not how people are going to view general DVD content. At best, including Blu-Ray in PS3 is a wash.

[kevkrom]

Sony's history in this regard is not good -- many of their proprietary technologies, despite being as good or better than the competition, lose out, and usually based on licensing issues. Say what you want about Microsoft, if they're getting in the game and choosing sides, it's probably unwise to bet against them.

[chilepepper]

yup... and besides, the M$-Toshiba alternative will be called Blue-Screen-Of-DVD a.k.a. BSOD

besides, if M$ is for it, i'm agin it...

[Publius6961]

c) The company that sells adequate performance for substantially less.

[Publius6961]

It's all about who can get it into more boxes more quickly, not about the better format. Witness Betamax and Apple, to name two.

Not exactly.
Both Apple and Beta was the result of artificial restrictions (licensing) and resulting higher cost
It was the price difference that killed Apple and Beta.

[kpp_kpp]

i thought it was a given all along that ms wasn't going to be siding w/sony. (ps vs xbox)

[SlowBoat407]

It was the price difference that killed Apple and Beta.

I'm sure that was a large part of it, but I remember when the first movies were available for rental, there was a preponderance of titles available on VHS, but only a small section set aside for Beta. Likewise with Apple hardware. Matsushita licensed the hell out of their format, and everybody and his brother was making VHS machines. Sony was the only one making Betamax machines, so there were fewer of them. The natural result of that is, as you say, higher prices. Same goes for Apple. If these producers had opened up production for their hardware, there would have been greater competition, lower prices, and a tougher format war in each case.

[Question_Assumptions]

The biggest reason why VHS won was that the tapes could hold more (starting with the 2 hour VHS tapes) and when tapes cost $30 each (in Carter-era 1970s money) and people wanted to record two-hour programs, that mattered a whole lot more than either quality or console price.

[LanPB01]

The XBox 360 blew the opportunity to introduce HD-DVD first. My money will be going to Sony.

[Moral Hazard]

I'll probably buy the Xbox 360 when it comes out. I'll eventually buy the Playstation 3 as well, though when I buy it will depend on the game library and price.