Microsoft could have stopped the Blu-ray/HD DVD war

Red states and blue states. With the presidential primary season in full pander mode, red states and blue states are currently a big political story. But in the world of technology, red states and blue states refer to the red and blue lasers that dogmatically separate the two competing and incompatible high-definition disc formats, the blue laser-powered Blu-ray and red laser-powered HD DVD.

Competing technology formats are as natural as, well, Democrats dueling Republicans. But the HD blue/red war could have been averted. How? Ask Bill Gates. Why? Read on.

DVD History 101

A dozen years ago, the creation of the original DVD standard started out as a similar format war between Sony-Philips and Toshiba. The two technologies weren't irreconcilable. But as in any format war, he who controls the patents gets rich from the patent royalties, so the sides went to the mattresses for format supremacy.

Both courts courted IBM, the King Kong of the computer world in an era in which PCs were still referred to as "IBM compatible." Wielding its formidable clout, IBM essentially dictated terms for a unified DVD format to the benefit of everyone.

We Got the Horse Right Here…

But over the last decade, IBM has devolved from King Kong to Donkey Kong. So when negotiations between the HD DVD camp (led by Toshiba) and the Blu-ray forces (led by Sony) to establish a unified format broke off in August 2005, there was only one outfit wielding a big enough club — and the documented willingness to swing it regardless of legal niceties — to force a compromise: Microsoft.

But unlike IBM, Microsoft had a horse in the race: Xbox. Sony, naturally, would add Blu-ray to PlayStation 3, leaving Microsoft at a competitive disadvantage. Microsoft couldn't very well add a Sony technology to the Xbox. So just a month after Sony and Toshiba broke off their unified format talks, instead of using its great power for good and lock the protagonists in a room until one format emerged, Microsoft partnered with Toshiba and announced that Xbox 360 would include an HD DVD option.

So, as Dr. Phil would ask, how's that working out for you? Sony has a Blu-ray drive built into the PS3. But Microsoft's HD DVD drive is a $199 add-on to the Xbox 360 and doesn't include an HDMI connector. You can only connect the drive via USB through an Xbox 360, and only the Elite version includes an HDMI out. The bottom line: adding HD DVD hasn't helped the Xbox differentiate itself from PS3. Hell, Nintendo's HD-free Wii is kicking both of their asses.

Just Shut Up!

But Microsoft didn't even need to take an active role in brokering a compromise format. All Bill had to do was sit Buddha still. The New York Times noted that after Microsoft reversed its neutral position and adopted HD DVD, "the unexpected change of heart reverberated through the technology industry. Suddenly, Toshiba's seemingly quixotic defense of its format had new life. Intel joined Microsoft in backing HD DVD. Hewlett-Packard withdrew its exclusive support of Blu-ray."

In other words, without Microsoft selfishly choosing sides, HD DVD would have been dead in the water, and, for better or for worse, we'd all be shopping for Blu-ray players now. Instead, the sides are about even. While Blu-ray is outselling HD DVD in the U.S., the reverse is true in Europe. And China, tired of paying royalties to Japanese companies, will introduce its home-grown red laser-based EVD (Enhanced Versatile Disc) format next year.

DVD hardware makers and the movie studios are doing their damndest to resolve the resulting red/blue battle. Warner and Paramount are releasing titles in both formats, and those studios that aren't yet likely will (except Sony/Columbia, of course). Warner announced a Total High Def (THD) format, a single disc with the Blu-ray version on one side and the HD DVD version on the t'other. The first THD discs are rumored to be coming later this summer, with The Lord of the Rings trilogy an odds-on favorite to be among the first. But no other studio has signed on yet.

On the hardware side, you can already buy the tech equivalent of Hillary Giuliani. (Rudy Clinton?) LG's dual-format Blu-ray/HD DVD player, the BH100 ($1,300), has been selling surprisingly well for months (according to our super-scientific sampling of one Manhattan retailer), and Samsung says its more fully HD DVD-compatible dual HD player, the BD-UP5000, will be available for the holiday season, probably for around $1,000. For less than either, you can already buy a Sony BDP-S300 ($499), a Toshiba HD-A2 ($299) and an XtremeHD 4-1 HDMI switcher ($100) to connect both to your A/V receiver, with enough left over for copies of Black Snake Moan in both formats.

Format Catch-22

But deciding to buy a combined deck or one of each wouldn't be an issue if Bill had just shut up. We money-conscious non-early adopters, otherwise known as mainstream consumers, normally would wait for the market to declare a winner before investing in either format. But with both sides now nearly equal in strength, the market is unlikely to make a decision anytime soon. Sony is probably happy. Toshiba is thrilled. And we're screwed...source