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Tipping Point for HD DVD?

October 16, 2007 | Author: Ibex Marketing

In the battle for the high-definition DVD, Blu-ray has a big advantage because there are all those PlayStation 3 consoles out there with Blu-ray drives. In spite of this, HD DVD has a strong advantage by having lower cost players than Blu-ray; entry level models cost about half as much. And I’m convinced that purchase price trumps features, available titles, and installed base. (Note that I’m impartial but not unbiased on this topic; I’ve picked HD DVD as the eventual winner.) Now comes an interesting analysis that may prove to be the tipping point in HD DVD’s favor.

My former colleague Melissa Perenson is now at PC World, and she wrote an excellent piece based on an interview with Toshiba’s VP of product development and product management at the DVD Forum conference in Los Angelese last week. The Toshiba VP said that the first notebook with an HD DVD drive was priced at $3,000. The price now is about $1,500, and by Christmas, they are expected to be below $1,000. And these are not just HD DVD drives; they are also DVD SuperMulti drives that can also write to standard recordable DVD and CD media, making them ideal for backup and other data purposes.

So what’s significant about this news? Next year, notebooks are expected to outsell desktop computers for the first time in this country. Almost all notebooks have high resolution, wide format screens, so clearly people are watching movies on their notebooks. (That extra screen width has negligeable advantages for data applications.) And guess who is one of the top notebook manufacturers? Yup. Toshiba.

And how do you drive down the cost of a technology component? Build a zillion of them. Increasing sales volume improves cash flow and results in higher production efficiencies. According to the article, Toshiba intends to make HD DVD an option on most of its notebook models for 2008, and expects to ship more than 5 million HD DVD drives in notebooks next year. There goes the PS2 installed base advantage, and this can only increase the price advantage of HD DVD over Blu-ray players. If (or when) the tide starts to shift in HD DVD’s favor, I’m sure we’ll find that the Hollywood studios’ commitment to Blu-ray is thinner than a DVD disc.

(Tip of the hat to Steve Sechrist at Insight Media for bringing this to my attention.)