HP Plays Both Sides in DVD Standard Debate

HP's decision to cross over what rival Blu-ray may consider enemy lines is the latest in an ongoing debate over a unified format for next-generation DVD technology. Two standards are competing for the right to recode information for a variety of media from VCR tapes to CDs.

In one corner is Blu-ray with powerful supporters like Sony (NYSE: SNE) and Matsushita Electric Industrial (NYSE: MC) . On the other side is HD-DVD, a newer technology with supporters like Toshiba and NEC (Nasdaq: NIPNY) .

At stake is the ability to tape into a media storage market that research firm In-Stat expects to grow from approximately US$33 billion in 2004 to $76.5 billion in 2009 worldwide.

Beginning of Things to Come?

Jupiter Research analyst Michael Gartenberg told TechNewsWorld that we may soon see more vendors begin to consider taking both sides, particularly since there is no clear winner in the marketplace.

"Microsoft and Intel (Nasdaq: INTC) are strongly behind the HD-DVD standard because it allows for things like content portability, which is something that the Blu-ray folks have not implemented yet," Gartenberg said. "Obviously that's very important for both Microsoft (Nasdaq: MSFT) and Intel, and it's no surprise that HP is getting on board as well."

Playing Both Sides

Previously, HP supported the Blu-ray format exclusively. However, the company is broadening its DVD horizons after the Blu-ray Disc Association failed to accommodate its requests.

Specifically, HP had requested the Blu-ray Disc Association adopt two customer-friendly technologies, Mandatory Managed Copy and iHD, which are already included in the HD-DVD format. Only Mandatory Managed Copy, which permits consumers to make legal copies of video content, was formally adopted by the association.

"We're encouraged that the Blu-Ray Disc Association is adopting Mandatory Managed Copy. Because HP wants to deliver the most user-friendly and cost-effective solution to our customers, we have decided to support both formats," said Maureen Weber, general manager, Personal Storage Business, HP.

Going Where the iHD Is

Blu-ray did not implement iHD, which HP describes as a technology that enables content providers to offer greater interactivity on next-generation DVDs and helps ensure a more compelling user experience when recording HDTV programs or moving digital content throughout the home.

HP believes both Mandatory Managed Copy and iHD are important to fostering the digitally connected home, and both of these technologies are incorporated into HD-DVD.

Microsoft has already announced plans to integrate iHD into its new Windows Vista operating system. HP believes this integration will reduce development costs and provide a more affordable solution for consumers. In addition, the company said HD-DVD provides a rich, cost-competitive solution for the consumer and is easier to manufacture.

Improving Its Position

Blu-ray's decision led HP to join the HD-DVD Promotions Group.

"By joining the HD-DVD Promotions Group and continuing work with the Blu-ray Disc Association, HP will be in a better position to assess true development costs and, ultimately, provide the best and most affordable solution for consumers," Weber said.

Analysts said HP's decision to join the HD-DVD Promotions Group underscores the level of fragmentation of the industry. Ultimately, Gartenberg said the ongoing debate is going to stand in the way of consumer adoption.

"When consumers look at this whole situation and the way things are fragmented, they may very well decide they are going to wait until the there is more of a shakeout or a clear standard," Gartenberg said.