Home Messages Index
[Date Prev][Date Next][Thread Prev][Thread Next]
Author IndexDate IndexThread Index

Lessons from the Death of HD-DVD: Another Lethal Wound for Microsoft's Dying Empire

  • Subject: Lessons from the Death of HD-DVD: Another Lethal Wound for Microsoft's Dying Empire
  • From: "nessuno@xxxxxxxxxxxxxxxxxxx" <nessuno@xxxxxxxxxxxxxxxxxxx>
  • Date: Fri, 22 Feb 2008 08:05:16 -0800 (PST)
  • Complaints-to: groups-abuse@xxxxxxxxxx
  • Injection-info: k2g2000hse.googlegroups.com; posting-host=; posting-account=568lXQoAAABjXjyWNKDgY4SBqvNBTsFV
  • Newsgroups: comp.os.linux.advocacy
  • Organization: http://groups.google.com
  • User-agent: G2/1.0
  • Xref: ellandroad.demon.co.uk comp.os.linux.advocacy:610722
[Death of HD-DVD was predictable.] Here's why HD-DVD's end should not
have been a surprise, what lessons can be learned from its death, and
what its demise means for Microsoft.

[HD-DVD--Bluray format war, Microsoft vs Sony...]] In the new HD video
market, Microsoft again wanted to push its Windows Media codecs while
Sony wanted to establish its blue-violet laser technology.

[Origins of format war...HD-DVD had early lead...Disney's Eisner
converted to Microsoft HDi and Windows DRM...started to look like
Betamax all over again...]

[But then Sony bought MGM, Eisner left Disney, studios shifted to Blu-
Ray, Toshiba late on HD-DVD, Sony made many hardware partnerships,
Toshiba's HD-DVD expensive, they wanted to jump ship...]

...By the end of that year [2006], Microsoft began selling an external
$200 HD-DVD player for the Xbox 360, just as Sony introduced its
PlayStation 3 with an integrated Blu-Ray player....

By the end of 2006, Microsoft had shipped ten million Xbox 360s to
stores, while Sony had only sold a few hundred thousand units of the
new PS3. However, Microsoft only sold a limited number of its optional
HD-DVD drives to Xbox users, while every PS3 shipped with Blu-Ray

Compared to standalone HD disc players, Sony's PS3 not only offered
the cheapest Blu-Ray system, but also did a variety of other things,
including media downloads and of course games. Throughout 2007, Sony
shipped nearly as many PS3 units (6.5 million) as Microsoft sold Xbox
360s (7.3 million). Again, every PS3 played Blu-Ray, while only a
small number of Microsoft's console buyers opted for the HD-DVD

Many PS3 buyers were buying them, not as game machines, but on the
recommendation of sales people because it was the most economical Blu-
Ray player. That surge of Blu-Ray players began creating a market for
HD discs that greatly outnumbered the few hundred thousand HD disc
players sold outside of the PS3.

The War on Microsoft.
While the PS3 pushed the Blu-Ray format over the goal line, the entire
industry outside of Microsoft, Intel, and Toshiba was lined up behind
Blu-Ray. There simply wasn't any realistic chance that HD-DVD would
prevail. This wasn't a simple physical format war like the old VHS and
Betamax rivalry; also at stake were the future of video codecs and
embedded interactivity development. This was a battle for software and
open markets that went far beyond HD disc movie playback.

Companies like Apple and Sun, neither of which had expressed any
interest in building or selling HD discs, were unitedly opposed to HD-
DVD because it meant Microsoft would expand its proprietary control
over video codecs and the embedded software runtime used for
interactivity. The industry in general has actively been pushing to
rid itself of dependance upon Microsoft controlled standards.

[10 years earlier, other companies backed QuickTime against Microsoft

Since then, Microsoft tried hard to push ASF, derail MPEG-4, and even
created its own bastard version of MPEG-4 codecs under the name
Windows Media 9. It also worked hard to establish its proprietary
audio codecs in the field of portable media players. When those
efforts all failed, Microsoft ran WM9 though a sham standards process
that rebranded it as VC-1, and set up a satellite group of "partners"
to advocate it, all of which were owned or directly controlled by

None of these efforts hid the reality that Microsoft wanted to simply
duplicate in media what it had done to the PC desktop: copy existing
technology, add proprietary hooks, and then sit back and tax the
industry with software fees without adding any value. After having
been burned repeatedly, the rest of the industry is now ready to shoot
down every effort Microsoft makes to enslave innovation and progress.

Misinformation Wars.
Added to the strong showing of studios and manufacturers already
supporting Blu-Ray since 2005, the impact of Sony's integration of Blu-
Ray on the PS3 left little room for the HD-DVD camp to maneuver.
Microsoft's efforts to support HD-DVD in Windows Vista and on the Xbox
360 had a limited effect because Vista turned out a commercial
failure, and 360 sales were in a precipitous free fall, dropping 33%
year over year in 2007. Sony had attached Blu-Ray to its PS3 rocket at
launch while Microsoft tied two sandbags to HD-DVD: Vista and the Xbox

Apple, Nintendo, and Sony were all working to push OpenGL against
Microsoft's proprietary DirectX. The video industry was pushing behind
the ISO's MPEG-4 H.264 and AAC, aided by the popularity of Apple's
iTunes, rather than the proprietary WMA and WMV/VC-1 codecs Microsoft
was working to advance. The embedded industry favored Java over
Microsoft's latest proprietary efforts to own interactivity. HD-DVD
died because the industry collectively worked to kill it as a
proprietary monster that would enslave users, studios, and developers
to Microsoft's software. It wasn't a simple disc format struggle.

The public wasn't aware of what was going on behind the scenes because
Microsoft worked diligently to spin a misinformation campaign that
suggested that HD-DVD would be cheaper, more open, and deliver more
content. Backers were fed talking points that insisted that HD-DVD
discs were cheaper to create, that the Chinese would pump out ultra
cheap players to support Microsoft, and that HD-DVD's DRM was somehow
easier to get around than Blu-Ray. This was all false.

When charged with the reality that Microsoft is nothing more than a
marketing organization pushing inferior technology tied to proprietary
standards that will later be leveraged to extort higher prices, the
company responds with a smoke screen that declares that its products
will be first-to-market and supported by lowballing Chinese
manufacturers. At the same time however, Microsoft has only ever
delivered late, inferior products that have a higher total cost of
ownership. Its supporters have worked hard to bury this reality even
as Microsoft continues to raise prices on poor products that have
limited competition, such as Windows Vista.

Reality Distortion.
Despite the industry's widespread backing of Blu-Ray, Microsoft
similarly worked hard to create the illusion that HD-DVD was a viable
product. This was critical because HD-DVD was Microsoft's last effort
to force the adoption of VC-1 and HDi. It had already failed to
successfully use WinCE in any other embedded market, from smartphones
to music players to handheld computers, and had similarly failed to
establish Windows Media as a download format against the ISO's AAC and
H.264, widely popularized by Apple's iTunes.

In a final act of desperation, the HD-DVD camp signed up Paramount and
DreamWorks as new exclusive movie studios for HD-DVD. This pitted
roughly half of the studios behind each of the two rival formats, with
Warner Bros. being unique in offering titles in both formats.
Microsoft's efforts to prolong the format war had nothing to do with
players or media, and everything to do with forwarding its proprietary

However, consumers were confused by the format uncertainty, which
helped to slow sales across the board. Irritated by Microsoft's
refusal to cooperate, Warner Bros. announced a pullout of HD-DVD
support right before CES, yanking the plug on Microsoft's HD-DVD
marketing push planned for the show. That signaled an enthusiastic
redrawing of the watershed of support behind Blu-Ray, from retailers
like WalMart to movie rental groups including Blockbuster and Netflix,
and ultimately to Toshiba as HD-DVD's hardware producer.

What the Death of HD-DVD Means.
HD-DVD is dead, and with it dies Microsoft's aspirations to inject its
proprietary software in media development. This is also a big strike
against VC-1; despite being written into the Blu-Ray standard along
with the ISO's H.264, most Blu-Ray developers are moving toward H.264,
which not only allows them to master HD discs, but also deliver mobile
and downloadable versions using the same codec for playback on devices
such as the PSP and iPod.

The death of HD-DVD also presents further evidence that Microsoft is
increasingly incapable of pushing its own proprietary standards using
its Windows monopoly. Building support for HD-DVD into Windows Vista
did almost nothing to shore up support for the format, and tying it to
the Xbox 360 similarly did little to push things toward the outcome
Microsoft wanted.

In the 90s, Microsoft maintained an invincible aura praised by loyal
pundits; it defeated small companies, bought up rivals and destroyed
them, slit its partners' throats, and put startups out of business. It
only ever gave the appearance of maintaining strong relationships with
its partner companies. However, in the last ten years, that strong
facade has been destroyed by a series of very public failures:

WinCE helped to destroy Palm, but did nothing to advance the state of
the art and has since fallen into a distant and increasingly
irrelevant third place in smartphones. It has become similarly
irrelevant in the small handheld computer market for which it was
created, and has failed as an embedded system. Microsoft moved its
UMPC plans to use its desktop Windows, dropped any hope of using WinCE
as the basis for game consoles, and most recently bought up Java-based
Danger to replace WinCE as its mobile strategy. If Microsoft is fully
abandoning WinCE, why should partners stick around?

Windows XP has floated along as the default choice for PC consumers,
but when Microsoft tried to raise the price and tack on fluff features
with the Vista rebranding, buyers demanded to upgrade to the previous
version. Microsoft is still shipping Vista to manufacturers, but
corporations and end users are frequently reverting to Windows XP,
killing Microsoft's ability to leverage its market position to push
new proprietary standards and raise prices for features that were once
included for free, such as standard networking.

The Xbox 360 had a strong showing in its first year, but was still
unable to match the sales of Sony's PS2. In its second year, it not
only fell behind sales of the original Xbox [correction: 360 unit
shipments were up 30% over the original Xbox after the first year],
but 360 shipments also fell 33% year over year as buyers shifted their
attention to the newer Nintendo Wii and PS3. The Wii outsold the 360
in 2007 and the PS3 came within a stones throw of matching its sales
[update: the PS3 has also eclipsed 360 unit sales as it enters its
second year]. Going forward, there is no reason for thinking 360 sales
will dramatically turn around, as sales growth fell this year despite
the arrival of major hit new games.

In contrast, after a slow initial start in its first year, Sony's PS2
grew dramatically year over year back to back in 2001 and 2002, and
maintained annual sales well above the Xbox 360's 2006 peak for over
six years, selling an average of 16.8 million per year over its seven
year lifespan. Sony has similar long term plans for the PS3, while
Microsoft has been unable to sell a game console with a lifespan over
four years. The 360 is having a late life crisis just as the PS3 is
beginning to sell in adolescent volume.

Microsoft's monopoly power is dissolving, and its ability to create
anti-competitive partnerships and exclusive alliances is also falling
apart. Its hardware partners have been led on wild goose chases with
WinCE, desktop Windows, PlaysForSure, and now HD-DVD, leaving
alliances with Microsoft looking more like charity exercises than
business decisions.

Misinformation Is and Misinformation Does.
With the mask pulled off the bluffing, blustering HD-DVD, it becomes
clearer that the talking points generated by Microsoft's supporters
all have the same source. As new promises are made about the imminent
arrival of cheap new hardware from Chinese dumping, new partnerships
just around the corner, and the power of Microsoft's monopoly to make
the improbable happen, it will now be increasingly difficult for the
public to swallow them.

Those assurances applied not only to the failure of HD-DVD but also
the failure of the Zune, which was similarly supposed to take on the
world with Toshiba and turn into a Chinese mass production established
in place by the influence of Windows and the Xbox. Instead, MTV's Urge
defected from its Zune store partnership with Microsoft to join Real's
rival Rhapsody music store, and Microsoft never even built any
significant integration between the Zune and Xbox.

The Xbox itself was also supposed to rapidly turn around in price, but
it soon be came clear that the Xbox 360 was actually more expensive to
buy compared to the PS3 for users who get a hard drive, HD disc
player, wireless networking, and other features left off Xbox models.
In order to hide the fact that Xbox sales are dramatically tapering
off, pundits only ever counted the 360, PS3, and Wii in cumulative
numbers. No other market uses installed base to compare sales.
Microsoft certainly doesn't talk about installed base when comparing
the Zune to the iPod.

If the Zune had sold a respectable number of units, it would be
praised for its achievement rather than compared to the total number
of iPods sold in previous years. Instead, Microsoft gerrymandered a
market for "30GB hard drive based music players" in order to briefly
claim a slice approaching 10% of weekly sales numbers.

The End of A Great Illusion.
The reality is that Microsoft is forced to falsify reports and color
numbers because reality doesn't support the illusion of Microsoft's
unquestionable market power. The company is failing in consumer
electronics, and every year that passes makes its losses greater and
its accomplishments less impressive.

With shrinking sales, the 360 isn't going to hold off expansion of the
PS3. With the death of HD-DVD, Microsoft isn't going to push into
media sales and production. With fire sales of the Zune, Apple is not
going to lose its iPod business to the same company that already
failed to take it on with its PlaysForSure partners.

The death of HD-DVD says more about Microsoft and its future than the
general media seems to recognize. It's not a format war, its a culture
war between industry players working to advance the state of the art
collectively in partnerships, and one company working to own
everything while contributing very little. It's not hard to see why
Microsoft's bruised and abused former partners are working to align
themselves with open solutions rather than buy into more pain with
technology tied to Microsoft. That's very bad news for a company that
exists solely as a licensee of third rate product ideas.

The death of HD-DVD is another lethal wound for Microsoft's dying


[Date Prev][Date Next][Thread Prev][Thread Next]
Author IndexDate IndexThread Index