July/August 2006
Editor’s Outlook
Volume XXV, Number 4
by Wayne A. Thorp, CFA
The first VCR my family had growing up was a Betamax machine. I
guess my Mom was one of the “early
adopters” of this new technology and,
after several years, had dozens of Beta
tapes. Despite initially having superior
video and audio quality, Beta couldn’t
match VHS’ storage capacity—the first
Beta tapes could only hold one hour
of video, while the first VHS tapes
could hold two hours. In the end,
Beta lost out to VHS in the last great
format war.
Fast forward 30 years and the dogs
of war are again baying on the horizon.
HD DVD and Blu-ray are new highdefinition technologies battling to
become the consumer high-definition
digital video standard. The monetary
stakes are incalculable for the winner,
while the loser will be relegated to a
footnote in technology history. Both
formats have big-name support—HD
DVD is backed by Toshiba, RCA,
Sanyo, Intel, and Microsoft while Bluray has the support of Sony, Panasonic,
Dell, and Apple.
Both HD DVD and Blu-ray promise
superior audio and video compared
to today’s DVDs (assuming you have
a high-definition television). The
other advantage these formats offer
is greater storage capacity. HD DVDs
can store the equivalent of more than
21 standard CDs or more than three
standard DVDs. Blu-ray discs can
store even more, with the capacity
equivalent to that of over 35 CDs or
more than five standard DVDs.
So what does all this mean for consumers? Unfortunately, it probably
means some confusion and uncertainty until one format is made the
high-definition standard for DVDs.
Toshiba was first into the marketplace
with its HD DVD player and hopes to
launch an HD recorder in Japan this
July. Samsung began selling the first
Blu-ray player in the U.S. at the end
of June.
For those on the cutting edge of
technology wishing to take the plunge
into high-definition DVD, be prepared
to pay a premium for being one of the
first adopters. Samsung’s BD-P1000
HD DVD player retails for $999 while
new standard DVD players can be
found for under $100. Toshiba’s HDXA1 HD DVD player costs $799.
Some industry experts believe that it
could be the PC market that ultimately
decides which format will survive.
However, this landscape is just as
muddled as it is for consumer DVD
players. Sony, with its vested interest
in Blu-ray has already started shipping Vaio laptops with Blu-ray drives.
Dell, the world’s largest PC maker,
has voiced its support for Blu-ray as
well. However, Hewlett-Packard, the
number two PC maker, has said it
will support both formats. Microsoft
promises native support for HD DVD
drives in Vista Windows update,
which it expects to start shipping at
the beginning of next year.
HD DVD does have a head-start on
Blu-ray, with a greater supply of drives
and a larger number of movie titles.
Only time will tell whether Blu-ray
can survive this late arrival. One thing
going for it is HD DVD’s sluggish beginning: There are currently less than
30 major-studio titles available for
HD DVD players, and Toshiba’s firstgeneration player has not received an
overly warm reception.
Unless you are hell-bent on viewing
next-generation DVDs on your highdefinition television, you are better
off waiting for the dust to settle. The
stacks of Betamax video tapes collecting dust in my Mom’s basement speak
volumes about what can happen if you
come out on the losing end of such a
format battle.
Next Issue:
EDITORIAL STAFF
Editor—Wayne A. Thorp, CFA
([email protected])
Associate Financial Analyst—Cara Scatizzi
([email protected])
PRODUCTION STAFF
Managing Editor—Jean Henrich
Production Editor—Marika Bonaguidi
Assistant Editor—Alyna M. Johnson
Chairman—James B. Cloonan, Ph.D.
President—John Markese, Ph.D.
Vice President, Senior Financial
Analyst—John Bajkowski
Web address: www.aaii.com
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