High-Def DVD Battle Heats Up

In late January, the US Department of Justice began a preliminary inquiry into the Blu-ray group, a breakaway from the DVD Forum. Composed of Sony Corporation, Matsushita Electric Industrial Co., Philips Electronics NV, seven other manufacturers—and recently joined by Dell and Hewlett Packard—the Blu-ray group is suspected of interfering with the Forum's progress in establishing a standard for high-definition/high density DVD technology.

Blu-ray members aren't accused of criminal activity. A January 26 report in The Wall Street Journal explained, "the Justice Department often scrutinizes standards-setting efforts by large electronics companies . . . The DVD Forum issues explicit instructions to members telling them to avoid any actions that might be considered anti-competitive, such as coordinating pricing . . ."

In December, the Forum's steering committee gave the nod to a red laser format called HD DVD, developed by Toshiba and NEC. HD DVD has the advantage of being backward compatible with both standard DVDs and standard DVD drives, its backers claim, noting that retooling for mass production of HD DVD machines would be relatively inexpensive, with savings passed on to consumers. Blu-ray discs read by a blue-violet laser could hold up to six times the data of standard DVDs, or four hours of high-definition video per disc. The format has not been submitted to the DVD Forum for approval.

Some industry insiders fear a format war. Toshiba claims that first generation HD DVD machines could be priced at around $1000 each, compared to Sony's first domestic Blu-ray recorder that went on sale in Japan last year for about $4200. Affordable high-def DVD players/recorders could spur the already hot market for home theater equipment. Standard DVD players are now in approximately 50% of US homes, but high-definition displays are in fewer than 10%.

Dell and Hewlett Packard endorsed Blu-ray at the Consumer Electronics Show (CES) in Las Vegas, with announcements that new products would incorporate the format. Both companies have expanded from their traditional bases, making forays into the home entertainment space. It's a trend that will continue to grow as computers and consumer electronics become increasingly intertwined.