HP gets cold feet, endorses HD-DVD

[Gregg Lengling]

http://www.eet.com/news/latest/showArticle.jhtml?articleID=175004773
MADISON, Wis. — Embroiled in industry politics over next-generation high-definition optical disk formats, Hewlett Packard Co. on Friday (Dec. 16) reversed course by officially joining the competing HD-DVD group while maintaining its ties with the Blu-ray Disc camp.
While a majority of Hollywood studios have already extended support for Blu-ray, the next-generation DVD format battle is far from over.

HP's justification for straddling the fence was the "unreasonable cost we have to bear in supporting the Blu-ray format," which uses Java, said Maureen Weber, general manager of HP's Personal Storage Business unit.

Overall Blu-ray royalties total $30 per PC drive, Weber said. In contrast, everything PC vendors need to support HD-DVD "comes free, shipped and integrated with Vista — Microsoft Corp.'s next generation operating system," she added. Many PC companies have no choice but to support Microsoft Vista in the Microsoft-dominant operating system market.

Weber said Java-based Blu-ray format royalties include: licensing the GEM (Globally-Executable MHP) standard; the cost of a Java test kit from Sun Microsystems; and the cost of BD Java. While the licensing costs PC vendors must support HD-DVD remain unclear, HP has been assured by Microsoft of "roughly a 10-percent addition to cost of the current DVD drive," Weber added.

The bottom line for Microsoft is that PCs don't need Java because they already offer interactivity. In contrast, consumer electronics companies need Java to make their end products interactive. Just as consumer electronics manufacturers regard integrating Microsoft's Windows operating system as overkill, HP considers Java in a PC platform to be too costly. The format dispute has already split the computer industry. PC makers Dell and Apple Computer are aligned with the Blu-ray camp while PC suppliers like Microsoft, Intel, Toshiba and NEC are backing HD DVD.

HP appears to be straddling the fence, observers said.

In October, Weber warned of "legal implications if Microsoft is using its dominance in the operating system market — virtually a monopoly — to play favorites and hurt the competition."

What changed? HP's Ultimately, Weber said, "It's about money" and 'the cost to the PC industry" that forced HP to join the HD DVD camp.