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December 27, 2005

Microsoft arm twisting over HD DVD?

Posted by David Hunter at 11:58 AM ET.

Actually, it would be surprising if Microsoft weren’t twisting a few arms to get support for HD DVD in the ongoing HD DVD/Blu-ray high definition DVD format wrangle, but Junko Yoshida has an interesting update at EETimes:

Several industry sources last week told EE Times that Microsoft is muscling into the optical-disk fray by leveraging its operating-system clout to bundle HD-DVD within Vista, the company’s next-generation OS. There is also talk that the software giant may be planning to offer cash incentives — in the form “coupons” — to system vendors or retailers if they agree to support HD-DVD. Such coupons would provide “credits” or “memos” for each PC that is sold with HD-DVD inside.

Microsoft wouldn’t comment, but some partners would:

One fact, however, is hard to miss: In the short span of two months, Microsoft has gotten through to Hewlett-Packard Co. HP, which still sits on the board of the Blu-ray Disc Association and previously supported the Blu-ray format exclusively, joined the HD-DVD Forum earlier this month. This semi-reversal came in the wake of a series of meetings with Microsoft, said Maureen Weber, general manager of HP’s Personal Storage Business.

In October, when Microsoft and Intel Corp. announced their support for HD-DVD, Weber warned of “legal implications, if Microsoft is using its dominance in the operating system market — virtually a monopoly — to play favorites and hurt the competition” (see www.eet.com/news/latest/showArticle.jhtml?articleID=171202192).

She just used the “M” word! (Public details on HP’s reversal are here.)

Asked whether Microsoft is now doing just that, Weber said that in the end, “It’s about money and the cost to the PC industry.” Whereas the overall Blu-ray royalty structure adds up to $30 per PC drive, she said, everything a PC vendor needs to support HD-DVD “comes free, shipped and integrated with Vista — Microsoft Corp.’s next-generation operating system.”

Most PC companies have no choice but to support Vista in the Microsoft-dominant OS market.

The ultra competitive PC hardware business would give anything to shave $30 off the cost of a system (not to mention an additional HD DVD credit), but I’d offer a modest quibble here. While Vista will eventually support HD DVD, the word from Steve Ballmer is that the first release will not have the support. It’s all a question of timing like the Xbox 360 support. Therefore, the question is really whether it’s worthwhile to spend the $30 on a few system models to catch the early adopters.

More by following the link including comments from Dell who is holding fast for Blu-ray and several (not necessarily mutually exclusive) theories as to why Microsoft is pushing HD DVD so hard:

  1. It creates FUD over the Sony PlayStation 3 support for Blu-ray when the Xbox 360 shipped before high definition DVD support of any kind was available.
  2. A drawn out format battle makes “downloadable content” via PCs seem less risky to consumers than standalone players for prerecorded media.
  3. Blu-ray uses the Java-based Media Home Platform (MHP) to provide interactivity and Java is anathema to Microsoft. They’re also blaming MHP for the extra Blu-ray cost.

Finally, to keep the pot boiling, Pioneer announced that it would launch it’s Blu-ray drive for PCs in January in Japan and in the first quarter in the USA. It will be unveiled at the Consumer Electronics Show on Jan. 5-8.



Filed under Alliances, Blu-ray, CES06, Conferences, Coopetition, Dell, HD DVD, HP, Hardware, Java, Sony, Technologies, Xbox

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2 Responses to “Microsoft arm twisting over HD DVD?”

  1. Microsoft News Tracker » Microsoft denies OEM credits for HD DVD Says:

    [...] Concerning the story earlier this week that Microsoft was pressuring PC Makers to install HD DVD drives and was considering offering “credits” to those that do, Paul Thurrott reports a denial by Microsoft (see the update at the bottom): Microsoft tells me that it has “not offered PC [makers] special discounts or financial terms related to Windows Vista in exchange for adoption of HD-DVD technology.” The “EE Times” report, it seems, was so off-base, Microsoft chose not to respond. [...]

  2. Microsoft bails out of HD DVD | Microsoft News Tracker Says:

    [...] One other thing that is odd is that back in 2005 Microsoft was one of the leaders of the HD DVD cause with a public fulmination by Bill Gates among others, but the last ditch battles seem to have been fought by Toshiba alone while Microsoft was publicly AWOL.   Filed under Alliances, Coopetition, Xbox, Hardware, HD DVD, Blu-ray, Toshiba, Microsoft   [Permalink] [TrackBack] [...]

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