On the face of it Toshiba's HD DVD format had a lot going for it. What went wrong?
They had parity - or better - with Blu-ray:
Here's what killed them Toshiba made several strategic mistakes:
The bottom line: over 6 million Blu-ray players have been sold and only 1 million HD DVD players. That's what drove the studios to support Blu-ray.
The download threat The wildcard was the retailers. It was no accident that Blockbuster, the video rental chain, was the first to announce exclusive Blu-ray support last June (see Blu-ray vs HD DVD: game over). They face a slow death if people stop driving to stores to rent movies. If you can download movies without going to stores, sayonara Blockbuster.
Best Buy, Target and Wal-Mart were slower to see the downloading threat. The second version of Apple TV - lower priced and near HD quality - finally roused them.
The big question now: given a choice between a new player or an Apple TV-like appliance for downloads, which will America choose?
To Sony's credit Sony's key strategic move was to bundle Blu-ray into the PS3. That cost them hundreds of millions of dollars as the price of the PS3 didn't recover costs. It also delayed their entry into the market, giving the loss-making Xbox a valuable head start.
But it's the single most important thing that tipped the balance in Blu-ray's favor.
Going forward The value of Sony's victory remains to be seen. It isn't clear that Blu-ray is a big win (see Is Blu-ray worth it?) for most consumers. Very few people are going to upgrade their DVD collections to Blu-ray as many people did with VHS to DVD or LP to CD - Hollywood's great hope to reverse declining DVD sales.
Other technologies are quickly eroding Blu-ray's capacity advantage. Mempile's 1 TB optical disk is well on its way. Only by persuading consumers to watch even higher defininition video will retailers be able to fend off downloaded rentals.
The Storage Bits take This battle, like the Betamax-VHS battle in the early '80s, will be dissected by MBAs and strategists for decades. Only in time will the real winners emerge - and who's to say that Toshiba won't ultimately be the biggest winner.
Comments welcome, of course.