Taking Sides

This week I was enjoying a tasty red-meat dinner with an executive from a major tech manufacturer when I learned the real reason for Microsoft’s sudden change of heart regarding Blu-Ray and HD DVD.

It wasn’t that HD DVD has Mandatory Managed Copy, which is supposed to allow users to copy a disc’s content (and which the Blu-Ray Forum agreed to adopt). It also wasn’t about iHD, which is supposed to allow content providers greater interactivity (though there’s no doubt Microsoft hates Java). And it sure as hell wasn’t that Microsoft was looking out for consumers. Rather, it was about forcing Sony to delay the release of PlayStation 3, the game machine/home entertainment hub with built-in Blu-Ray playback capabilities.

“If it’s true, it’s very clever and shows Microsoft can still be aggressive on a number of different levels,” says Roger Kay, analyst and founder of Endpoint Technologies. “And it is in the mold of Microsoft’s style.”

OK, so maybe it sounds silly, particularly since Sony is more than capable of creating its own delays, but consider the stakes. PlayStation currently controls the worldwide console market, according to research firm In-Stat. That dominance is likely to continue until 2010. Any holdup in the release of PS3 affords millions of gamers an opportunity to give the Xbox 360 a second look—assuming, of course, Microsoft can overcome its own inventory issues.

Then there’s the threat the PS3 could become a home’s entertainment hub. With all the money Microsoft’s sunk into Media Center, do you really think they’d stand for losing that position to Sony? Unlikely.

At the outset of the Blu-Ray/HD DVD snit, Wedbush Morgan Securities analyst Michael Pachter told the Los Angeles Times, “If you hear Blu-ray wins, it’s over for Xbox. It’s not that [Microsoft] did anything wrong on the gaming side,” he said. “Sony is exploiting its position as one of the dominant consumer electronics manufacturers.”

HD DVD players like Toshiba’s HD-XA1 ($799) and HD-A1 ($499) are due to start shipping this month, as are the first round of movies available in the format. In my opinion, that’s a hell of a lot to pay for something that ain’t a burner and that may not even win the format war in the long run.

Just the same, the reality is that to move from music to video, users need the capacity a high-definition DVD format offers. For that reason, Kay says a standard has to emerge soon because the ubiquity of digital movies depends on that capacity. Although, again, all that capacity seems a waste if you can’t burn on it, which happens to be the biggest drawback with HD DVD.

Kay says if he had to bet on which format would win out, he’d put it at 60-40 for HD DVD…at least for now. But since this game is unlikely to play out till the end of 2007, the best advice is to let these companies fight amongst themselves and buy the last one standing. In other words, it’s in consumers’ best interests to hold off and continue enjoying those old-fashioned DVDs on your new-fangled HDTV.

Brian L. Clark is a reporter and consultant on all things digital, runs the The Tech Enthusiast’s Network, and writes for Money, Men’s Health, and Laptop. Read more Tuning Fork here.