Microsoft Hedging on HD-DVD?

Hmmmm.

http://www.dailygame.net/news/archives/006277.php

Microsoft Second-Guessing HD-DVD?
03/21/07

Ah, the Internet. A beautiful place, really. Limitless information, amazing research resources, active online communities, naked ladies ... what isn't there to like? Oh yeah, fanboys. OK, so 50 percent of the Internet sucks. The rest? Refreshing and entertaining, especially if you like the rumor mill.

Months ago an image found its way onto the Internets showing the supposed evolution of Microsoft's next-generation Xbox 360. Code-named Zephyr, this version 1.3 system would have HDMI output, a larger hard drive and an oh-so-sexy black case. Fanboys had a heyday with that one, with comments running the gamut from "Sony is teh d00m3d" to "Microsoft is finally waking up and smelling the high def, huh?"

Today those rumors appear to be confirmed. Game Informer's April issue has a two-page spread talking about the now-named "Elite" system, its 120GB hard drive and its HDMI output. And no, it's not an April Fool's Day joke. Game Informer is pretty upstanding, too, so it's safe to say this rumor is all but confirmed.

Yet the most interesting about the Elite system's specs is flying under the radar. The system still won't include an internal HD-DVD drive, something Microsoft's unnamed spokesperson said is happening for two reasons. First, to give consumers the choice of whether they want the HD-DVD functionality, and second, because the format hasn't been proven.

Those are both well and good, and the second is definitely true, with Blu-ray outselling HD-DVD two to one. But let's read between the lines on that last point. "The format's not proven." Neither is Blu-ray, and Sony's standing staunchly behind that format for obvious financial reasons. Microsoft made a big deal about HD-DVD being the superior medium prior to the Xbox 360's launch. Now? "The format's not proven."

I guess that sort of backpedaling is to be expected when your format is getting trounced, but for Microsoft to back off so suddenly is surprising. With this new super-premium system, Microsoft's obviously pandering to the high-budget high-definition crowd. Most consumers probably don't want to pay for the "forced inclusion" of an internal HD-DVD (many prospective PS3 owners were upset about having to pay for a spendy Blu-ray drive), but the people most likely to buy the Zephyr/Elite wouldn't blink twice. Maybe Microsoft figures those folks already own the HD-DVD add-on, so the internal drive would be redundant. Or maybe, just maybe, Microsoft is second-guessing its preferred format.

Like all business ventures, Microsoft's never been one to want to lose money. Short-term losses for long-term gain are OK, but the prospects of losing money in the long term are unacceptable. The battle between Blu-ray and HD-DVD is still extremely young, but at this early venture Sony's format is ahead -- and pulling away. With the HDMI jack on the Elite model, Microsoft will get Xbox 360 owners accustomed to using the output format and can test consumers' interest. At that point, nothing but pride would stop Microsoft from making a Blu-ray add-on for the Xbox 360. And there you go: the true media hub for the living room, regardless of the format du jour.

It's too early for Microsoft, or any other company, to switch sides in the high-definition format war, but it's never too early to start hedging bets. Microsoft has chosen to back HD-DVD, and if it's as passionate about the format as it was about Internet Explorer, Microsoft will toil for years on the unproven format until it bludgeons its way to the top. But Microsoft created and owned IE; it doesn't do either with HD-DVD. Loyalty and pride are great, but at the end of the day, Microsoft needs to answer to investors. And investors want to make money, not feel warm and fuzzy.

It's important to remember why Microsoft got into the console race to begin with: it wanted to be in the living room. The company's attempt to get into bed with Sony as the PlayStation's operating system fell through, and the Dreamcast eventually died. Microsoft's solution was to create its own console. There's an old joke about Democrats and Republicans: you're a Democrat when you're poor, a Republican when you're rich, and a Democrat again when you have so much money that you remember how to care about things other than money. Maybe that holds true here, as well. Microsoft wanted into every aspect of the living room. It got its game console, and now it wants into consumers' high-definition pants too. It's gambled on HD-DVD, but if Blu-ray really takes off, Microsoft could suddenly return to being Sony's friend -- and pay Sony the licensing fee to make a Blu-ray player peripheral.

Sure, such a move would require Microsoft to swallow some serious pride. But what's a little pride and a loss-leader when you're talking about the big-picture goal of "owning" the living room? I'm not saying it's going to happen, but the specs of the newfangled 360 look like Microsoft isn't as confident in its choice of formats. Is high-definition playback greener on the other side of the DVD tracks? Consumers seem to think so. And since when was Microsoft not after consumers' cash?

-- Jonas Allen

 

Not really.