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Blue Lasers: Follow the Money!

June 21, 2006 | Author: Ibex Marketing

The first Blu-ray high definition DVD drives have finally started to ship, and at last, we are starting to see comparisons between Blu-ray and HD DVD based on actual products instead of just published specifications and supposition. But why do we have this major battle between two competing high definition, blue laser DVD standards?

You might think that it’s simply because each side thinks that they have the better technology, and the world would be better off using their products. I don’t doubt that this is true, but it’s not the prime motivator in this case. As “Deep Throat” told Bob Woodward, “follow the money.”

Last week, we had a ring-side seat to a demonstration of just how powerful this factor can be. The San Francisco Chronicle and others reported on the seizure of some 20,000 Cyberhome DVD recorders and players, for alleged trademark infringement. You see, Philips owns some of the intellectual property required to make such products, and they charge a fee for its use. But Cyberhome licensed the required technology from Philips; the problem is that they apparently did not pay their bills and reportedly ran up a $22 million tab with Philips. Philips then pulled their license, but Cyberhome kept right on making the products. Philips complained, and a multi-agency task force seized the products.

Cyberhome is not the only manufacturer of such products. Add all the manufacturers together, and you can see why Philips is motivated to protect their licensing fees. And there are other licensing fees involved in DVD technology; add all the fees together and soon you get to a pretty big number.

So the technology fight over blue laser DVDs is not about the technology so much as who gets to license it. If these drives are to replace the existing DVD technology — which I still think is going to take a long, long time — then the winner stands to gain a lot, and the loser will miss out completely.