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September, 2005

  1. Format wars

    September 7, 2005 by max

    Here we go again, giants in the consumer electronics world are flexing their muscle, trying to promote, partner, steal or buy their way to dominance of the DVD format of the future. We have seen it before with betamax and VHS, but will we see it again ?.br /br /In one ringcorner is a powerful consortium consisting of Sony, Apple, Samsung, 20’th Century Fox, and a host of other players trying to promote the Blu-ray format. In the other ringcorner is an equally formidable consortium of amongst others Toshiba, Sanyo and Microsoft. The fight has begun, and the opponents are throwing both muscle money and integrity into the battle. All because the winner is expected to gain dominance of the market, and make zillions of dollars on licensing and IPR fees. But will they ?br /br /The whole assumption of the Betamax/VHS wars was that the consumer would only buy one machine. If there had been cheap combi-alternatives that could play both formats the situation would be much different. This is what is happening in the Blu-ray/HD-DVD war. a href=””Samsung has just announced/a that it will launch a player that is capable of playing both formats. Soon, pressed by demand, others will follow. Now the format war takes a drastic turn. The consumer will not care what format is used as long as it works. And with a dual player the two standards can live side by side without the consumer caring, or even knowing. For the two consortiums this is bad news. The expected outcome is that the winner will be able to set prices, control the format, and charge exorbitant licensing fees because everyone will be dependant on their proprietary format. But with two formats living side by side a monopoly situation will not arise, the market will demand the format with the best quality or the cheapest sales price. Meaning that the advantage is gone. The producer, distributor, and ultimately the consumer will choose the best or cheapest alternative, indifferent to the format because his player supports both. br /br /Know your history, but do not let it guide you blindfolded into the future.