End of the High-Def Format War: Five Pros and Cons

There's no question that the next-generation DVD, high-definition format war has been a detriment to consumers. Ever since Blu-ray Disc and HD DVD movies and hardware came to market in 2006, the cloud of uncertainty has hung heavy over both formats, constraining growth as wary consumers watched from the sidelines.

With Toshiba's withdrawal today from producing HD DVD players and PC drives, the format war has come to abrupt end--and consumers everywhere can breathe easier as they whip out a credit card to buy a Blu-ray player.

But it's not all good news for consumers. Now that the war is over, I can see both pros and cons. Here are some to consider.
Pro: One Format Rules Them All

With HD DVD's withdrawal, all movie studios will release their content on Blu-ray. That means when you buy a Blu-ray Disc player, you will be able to buy it with the confidence that all of the movies you'll want to see or buy--regardless of what studio produced and distributed the film--will be available on that format.
Pro: Your Movie Collectionf Will Play in Your Player

Buy high-def movies today, and know that those discs won't become tomorrow's Frisbees. That said, you still have a bit of buyer beware here: Older Blu-ray Disc players still remain on the market that don't support Blu-ray's Bonus View (also known by its former code-name, Profile 1.1). Such players won't be able to play back the picture-in-picture and other extra features that Bonus View provides, but they will play the movies.
Con: Price Drops Will Slow

When trying to win the war, Toshiba pushed prices on HD DVD equipment down artificially fast. Without the intense price competition from Toshiba's HD DVD players, we're not going to see the speedy drop in prices on Blu-ray players that we've seen in the previous two years.

In 2006, according to the Consumer Electronics Association, the average player price was $500. This is a number that I personally find incredibly low given that Blu-ray players were introduced in the summer and fall of 2006 at $1000. (HD DVD players cost less, and so clearly dominated the early sales if the average unit sales price still came out at $500). Fast forward to 2007: The average selling price dropped to $395. In 2008, the CEA expects the average player price to drop to $307.
Con: There Are Fewer Deals to Be Had

Think high-def TVs bundled with Blu-ray players. Think aggressive buy-one, get-one-free disc deals. I don't imagine Blu-ray's backers will completely drop such initiatives--after all, they have a vested interest in converting users to the new formats.

But I fully expect we'll see fewer such promotions, and that they'll be used more judiciously than they have been in what has turned out to be the last few months of the format war.
Pro and Con: Expect to Find HD DVD Movies and Hardware on the Cheap

Toshiba says it is working closely and communicating directly with its retailers on next steps. The company will begin to reduce shipments of HD DVD players to retails channels, aiming for cessation by the end of March 2008. Presumably players will be sold on the cheap.

Best Buy spokesperson Brian Lucas says his company doesn't have any immediate plans to pull HD DVD product off the shelves at this point. "Customers who still want to purchase HD-DVD movies will be able to come to our stores to do so. But we anticipate demand will drop considerably, and as demand dries up for HD-DVD products you will start to see us pull them from our shelves," Lucas says.

If you see an HD DVD player--specifically the A35 or the A30--for about $100, you'd be getting a good upconverting DVD player for the price (upconversion enhances your DVD movie viewing pleasure). But that's still a higher price than some upconverting 1080p DVD players, so buyer beware.

Toshiba After HD DVD: What Lies Ahead?

By now Toshiba's decision to no longer develop, manufacture, or market HD DVD players and recorders is public knowledge. What's next for the company, and for consumers who bought into the format it supported? A close look at Toshiba's press release reveals some answers.
Long-Term Impact

"We carefully assessed the long-term impact of continuing the so-called next-generation format war and concluded that a swift decision will best help the market develop," says Atsutoshi Nishida, Toshiba president and CEO.

There's irony here, for sure: After all, Toshiba forged ahead with its technology two years ago, at a time when a format war could have been averted before products went to market and consumers were dragged into the mess. Perhaps this is the company's way of apologizing for the whole debacle.
High-Def Lives

Nishida continues, "while we are disappointed for the company and more importantly, for the consumer, the real mass market opportunity for high definition content remains untapped."

That Toshiba still sees the market opportunity for high-definition content is no surprise. This is a company that makes HDTVs. What will you play on those enormous HDTV screens if not high-definition content?

But will Toshiba enter the Blu-ray Disc player market? It's doubtful. In part thanks to the format war, prices have deteriorated so quickly that the margins just aren't there. Plus, the market is fast moving toward commoditization. Give it another two years, and we'll see Blu-ray Disc players being sold for under $200.
Beyond the Disc

At the same time Toshiba announced its withdrawal from HD DVD, the company said it would increase its focus on high-capacity NAND flash memory and small hard drives. Toshiba also said it would work on maximizing next-generation CPUs, visual processing, and wireless and encryption technologies.

Shortly after making its HD DVD announcement, Toshiba revealed that it has partnered with SanDisk to build a new flash memory chip factory; the companies will share the output from the factory. Toshiba is also launching another chip factory of its own for NAND flash memory.

If Toshiba could get costs down and capacities up on its portable hard drives, the company could pursue another market: high-definition recording to hard disk for DVR-like networked media players. Converged devices such as these could be attractive to network-savvy users who want everything networked throughout the home, including their high-definition content.

That said, Apple's foray into the field--Apple TV--didn't exactly get consumers humming. For Toshiba to make a go of it, the company would have to make its product easier to use and better than the solution that cable and satellite operators currently provide: high-def DVR boxes that require few cables. Toshiba could offer a premium high-definition DVR that also supports streaming media around the home network; years ago Toshiba had prototype designs for such a concept (sans the high-def). Toshiba has already dipped into media streaming with its Network NAVI interface introduced on the RD-XS54 DVD recorder a few years ago.
HDi: Does It Still Have a Future?

Toshiba says it intends to "maintain collaborative relations with the companies who joined with Toshiba in working to build up the HD DVD market, including Universal Studios, Paramount Pictures, and DreamWorks Animation and major Japanese and European content providers on the entertainment side, as well as leaders in the IT industry, including Microsoft, Intel, and HP. Toshiba will study possible collaboration with these companies for future business opportunities, utilizing the many assets generated through the development of HD DVD."

Translation: The company plans to maintain good relations with its current partners.

However, this may be an oblique reference to the HDi interactivity initiative Toshiba and Microsoft began in 2007, which involved expanding the advanced interactive layer used in HD DVD media authoring. As recently as late January Microsoft was pushing its HDi technology at the 2008 Sundance Film Festival. And Toshiba and Microsoft have revealed that the larger vision for HDi included a universe where multiple devices--including portable media players, servers, and content stored on the Internet--would use HDi to talk with one another.

It's quite possible that Toshiba plans to continue exploring HDi--assuming Microsoft plans to continue pursuing the technology in light of HD DVD's demise.

Internet failure hits two continents

DUBAI, United Arab Emirates (CNN) -- High-technology services across large tracts of Asia, the Middle East and North Africa were crippled Thursday following a widespread Internet failure which brought many businesses to a standstill and left others struggling to cope.

Hi-tech Dubai has been hit hard by an Internet outage apparently caused by a cut undersea cable.

Industry experts are blaming damage to two undersea cables but it is not known what caused the damage.

Reports say that Egypt, Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, Bahrain Pakistan and India, are all experiencing severe problems.

Nations that have been spared the chaos include Israel -- whose traffic uses a different route -- and Lebanon and Iraq. Many Middle East governments have backup satellite systems in case of cable failure.

Stephan Beckert, an analyst with TeleGeography, a research company that consults on global Internet issues, said the damaged cables collectively account for the majority of international communications between Europe and the Middle East.

Du, a state-owned Dubai telecom provider, attributed the outage to an undersea cable cut between Alexandria, Egypt and Palermo, Italy, according to an internal memo obtained by CNN.

In India, Spectranet and Telecomasia.net, two large Internet service providers were experiencing problems. Reliance, a third major Indian Internet provider, said it was not affected.

An official at Egypt's Ministry of Communications and Information Technology, speaking on condition of anonymity told AP it was believed that a boat's anchor may have caused the problems, although this was unconfirmed. Beckert agreed that was a likely cause.

The head of an Egyptian Internet service provider called the situation a "wake-up call" for the region, which he said is too dependent on underground lines and does not have a strong enough back-up system. Mohammed Amir, head of Quantum, an ISP in Cairo, described the situation as "a major problem," but expressed hope that the worst of it is over.

The two cables damaged are FLAG Telecom's FLAG Europe-Asia cable and SeaMeWe-4, a cable owned by a consortium of more than a dozen telecommunications companies, Beckert said.

He added the options while those cables are repaired were re-routing traffic around the globe or using an older undamaged cable that has less capacity -- both of which would cause usage delays.

Kuwait's Ministry of Communications said the problem could take two weeks to solve, according to a statement carried by the state news agency, KUNA.

There were concerns in India that an Internet slowdown could affect trading patterns at the country's two major exchanges, the National Stock Exchange (NSE) in Delhi and the SENSEX exchange in Bombay.

Rajesh Chharia, president of India's Internet Service Providers' Association, explained that some firms were trying to reroute via Pacific cables and that companies serving the eastern US and the UK were worst affected, AP added.

Besides the Internet, the outage caused major disruption to television and phone services, creating chaos for the UAE's public and private sectors.

The Du internal memo called the situation in Dubai "critical" and stated that the cable's operators did not know when services would be restored.


"This will have a major impact on our voice and Internet service for all the customers," the memo stated. "The network operation team are working with our suppliers overseas to resolve this as soon as possible."

The outage led to a rapid collapse of a wide range of public services in a country which proudly promotes itself as a technological pioneer.

Sources from Emirates Airlines confirmed to CNN Arabic that the outage did not affect its flight schedules -- a statement which assured hundreds of travelers worried after rumors about the possibility of rescheduled flights due to the faults.

However, Dnata, a government group in charge of providing air travel services in the Middle East and ground handling services at Dubai International Airport, acknowledged facing problems because of the outage, sources from its technical department confirmed to CNN Arabic.

The outage heavily crippled Dubai's business section, which is heavily reliant on electronic means for billions of dollars' worth of transactions daily.


Wadah Tahah, the business strategies and development manager for state-owned construction company EMAAR, told CNN Arabic that it was fortunate the outage started Wednesday, when there had been only moderate activity in the UAE markets. He said that softened the blow to business interests.

But Tahah warned that if the outage continued, "such a situation could create problems between brokers, companies, and investors due to loss of control.