A different opinion on the launch of Blu-Ray (1 Viewer)

[Ronald Epstein]

Great little article posted in Home Media Retail Magazine concerning Fox and Blu-Ray.

I have a lot of respect for Michael Dunn. He's a real nice guy and
I'm certain he is doing whatever is needed to tout Blu-Ray, the
format his studio has invested themselves in.

...and while I'm not saying he is wrong about comments he has
made, I am just at odds at how he can substantiate this:


As much as I want Fox to enjoy a profitable launch, I'm very
much at odds about the comments concerning how successful the
Blu-Ray launch is going to be.

Players are now twice as expensive as HD-DVD. There are far more
HD-DVD players being bought right now than Blu-Ray. As long as
hardware prices remain at $1k, that isn't going to change. Sure, the
early adopters will buy the players -- but HD-DVD players are already
appealing to a wider market just because of price.

HTF members are buying far more HD-DVD players than Blu-ray.
Even people I work with (who certainly are not early adopters) are
coming to me and asking questions about buying their first HD-DVD
player simply because it is affordable.

Now, where I totally agree with Mr. Dunn is the fact that gaming
consoles with Blu-Ray are going to significantly help the format. Based
on that assumption, I think there are strong numbers to be considered.

I hope Mr. Dunn is right. I do hope that Blu-Ray is everything he
touts it to be. There's no winning this format war as far as I am
concerned, so I might as well wish both the best of luck!

...and of course, it's still far too early to declare a winner in this war!

 

[Ryan-G]

My impression from reading that is that Mr. dunn is banking on PS3. But IBM's been indicating there's problems with PS3's Cell Processor and there's alot of potential for PS3 to be an unprecedented disaster. From pricing, to low yields of the Cell, to sudden inexplicable failure of the Cell, there's alot of negative potential there.

I think once PS3 is removed from the equation the outlook changes significantly. IMO it means a drawn out war if Universal Players don't pop up.

 

[Adam Portrais]

I have to agree with Ryan. Sony is putting all their eggs in the Blu-ray basket and hoping for the best. Not a smart idea IMO. The PS3 with it's huge price tag (for a video game console) is too much for the average PS2 owner today. Most people who got a PS2 back in the day got it because it played games and was (at the time) a relatively cheep DVD player (and as most found out it was not only cheap in cost but also in it's build). I think that if the PS3's price was a bit lower (and we all know the stories about how Sony is loosing so much money on this thing, so they won't be dropping the price anytime soon), then people would most likely pick it up and thus adopt Blu-ray.

With most of it's first gen products Sony has a bad habit of rushing things to market when they aren't ready and then basically forcing the consumer to re-buy the product again (how many of us had to take our Playstation back in the day and turn it upside down to get a game to play?).

If Blu-ray (which I've found over the course of writing this, I don't like typing- and I don't like BD, sounds dumb to me) becomes the "winner" of this format war then Sony will be all smiles. But if HD DVD “wins” then Sony could see some large problems ahead due to all of their games being Blu-ray. If they choose to stick to their statement that all of their games will be Blu-ray, and HD DVD is the format of choice, the games will be very expensive to manufacture (a lot of people bitch about games running $60 now, that would only get worse). And if they go to back to DVD then they will be admitting that they were wrong the whole time, and I just don't see Sony doing that.

It's like I've told a lot of people I think the adoption of Blu-ray (and possibly Sony's future in video games) will all rest on the shoulders of the PS3 and at this time I just don't see many main-stream consumers throwing down $600 for a game system, not to mention that most of then don't own an HDTV. And you can bet that with the HD DVD add on for the XBOX 360 (presumably $200-$250) that a lot of 360 owners are going to jump on the HD DVD bandwagon (it's a lot easier for people to pay $400 now and $200-$250 later than to spend $600 now- plus it gives the gamers a choice if they want HD DVD as a part of their system). It's all going to be very interesting around this time next year.

Until then, make mine HD DVD.

-Adam

 

[Stan Rozenfeld]

Different things I've been reading recently, and especially this has really driven home to me that people who are backing blu-ray are counting on PS3. It seems that issues such as BD50 and Mpeg2 are secondary, just a sideshow. PS3 is it, whether it suceeds or fails. Who knows? I won't pretend to predict the future. And we don't know how effective will Microsoft's xbox add-on strategy will be or what else they have cooked up to counteract the PS3.

This holiday season will be interesting, that's for sure.

 

[Paul Anthony]

From the way I see it, it's Beta vs VHS all over again. But, which format will end up winning? The technical superior Beta, or the popular VHS? In a perfect world, I would like to see BOTH winning.

 

[Rob_Walton]

Ron do you have any numbers for sales of either format right now? The latest I heard HD DVD had shipped 20,000 players in North America, though that was almost a month ago, so there may be more now. Still, it's not exactly of biblical proportions, is it? My guess is that the BDA decided to get some products out there early doors to dampen down HD DVD momentum, ahead of the true BD launch later this year.

Oddly enough the IBM interview many people reference with regard to Cell chip yeilds didn't leave the same impression with me that many HD DVD supporters seem to have gleaned. The fella said that chips of the cell's size generally have yeilds in the 10-20% range, so it seems to be an issue inherant with larger chips rather than the Cell specifically. Since Toshiba have anounced they'll be putting Cells in all their new TVs the yeild issue can't be anywhere near as pressing as some would like to imagine.

 

[elMalloc]

Are you guys forgetting that XBOX 360 will have an HD-DVD add on? PS3 will ship, it seems, with the blu-ray player - so that will certainly help, but there are some gamers who won't fork over money for PS3...

Since Sony forces us to buy the PS3 with blu-ray, it may help hte blu-ray fight, since MS makes the 360's HD-DVD an "add-on"....

 

[Shawn Perron]

There is no comparison between a product shipping with default support for a format and a voluntary add on, especially when you consider the dismal failure rates add ons to consoles have historically experienced. If you look at the history of consoles, people typically will not spend money on add ons for additional optional functionality.

 

[Eric F]

The XBOX 360 is virtually nonexistant in Japan, and they are expecting the PS3 to do extremely well in Asia.

 

[Hayes Preston]

To me, Mr. Dunn's comments look like nothing but pure marketing spin. If you say it in a press release or interview, then it must be true.

"the early adopter is going Blu Ray." OK...

It would be interesting to see if that's really the case (judging by reading this and other forums, I'd say the early adopter is clearly going HD DVD) to see some real numbers, players shipped, players sold etc.

I think the sales ranking of HD DVD vs. BD at Amazon tells an interesting story, that seem to counter Mr. Dunn.

 

[Austan]

Funny how we can all get so involed in a hypothetical debates. It's like listening to Trekies debate which warp drive core is faster or more efficient. By the Fourth of July 2007, we will have a much better picture of the "Format War". Sony (the main backer of Blu-Ray) hasn't even released their players yet, and the "unofficial" "official" release of Blu-Ray will happen in November 2006.

The debate about price is also questionable. Some reports are saying that Toshiba is heavily subsidizing their HD-DVD player while others says they are making a profit. This one is questionable because since Toshiba is the only manufacturer of HD-DVD players there is no other reference point. Sony on the other hand is subsiding the PS3 and most likely their own Blu-Ray player. But they wont be subsiding other manufactures of Blu-Ray. The $1000 is more of a valid price point for Blu-Ray while $500 for HD-DVD is not verified.

Right now as we speak, the BDA is ramping up production of hardware. They are producing millions of Blu-Ray disks and lasers. They have to supply the millions of PS3 along with Panasonic, Sony, manufactures, Samsung & Pioneer stand alone players. On the HT front, the number of Blu-Ray disks needed might not be much, but the millions need for games on the PS3 is the key. These production numbers will drastically reduce the price of Blu-Ray. On the HD-DVD front, XBOX360 games are not on HD-DVD media and since the main use of HD-DVD is for HT, there is nothing else driving HD-DVD hardware manufacturing besides the Toshiba HD-DVD players.

 

[Ryan-G]

First I have to clarify, BR is the format I'd prefer to see due to it's superior capacity, I'm actually not terribly thrilled with HD-DVD's specs.

Now, on to my points!

It is bad, very bad. A wafer is only so big, and someone(Probably IBM) is paying for the whole wafer and everything that goes into it. With a large processor like Cell, you have fewer processors per wafer, and when you have low yields you have to price the processors to cover expenses and profit. Let's say Cell can fit 10 per wafer, and they're only getting 2 good cores out of it. They have to price those 2 good cores sufficiently high enough to cover the expense of producing 10 cores. This is in contrast to say an Intel or AMD line where they're getting 8 or 9 good cores on a wafer and only have to price to cover 1 or 2 dead cores.

On top of that, some unknown number of processors may be having issues blowing out an SPE. Perhaps it's 1 in 100, perhaps it's 1 in 10. Perhaps it's 1 in 1000. We don't know really yet.

What this all works out to is that production of PS3 capable processors is taking significantly longer than it should, this means less units in the marketplace. You can only run X wafers in Y time, and when you're only getting 10-20% good chips in that time, you've got a manufacturing problem that's going to limit availability.

The real problem lies in pricing. If yields are only 10-20%, then prices will remain high for longer than normal for processors. While over time other processors become cheaper due to volume production, with low yields like that, pricing will remain abnormally high for abnormally long. That $500-600 pricepoint may stick around for 12-18 months or more, and that'll seriously harm adoption rates.

Further harming the whole situation is the failure rate. If SPE's are blowing in significant numbers, then there's problems with returns, negative press, and very unhappy customers.

Finally, Cell is a *highly* specialized processor. It's real world applications are limited, Cell is what is called an "In Order" processor. It can't look ahead or work on something else while it's first task is waiting on something. Intel, AMD, and many other processors are "Out of Order" processors. When something is waiting, they can do something else for a bit. In many applications the "Out of Order" processors are faster, and cheaper.

This is important because Cell can't subsidize costs of it's processors well by selling the 4-6 Sub-Processor(SPE's) chips that fail for PS3's to someone else at significant cost, a General Purpose processor like Intel's and AMD's are better suited and cheaper, so IBM has to sell the bad Cells for peanuts. Which means Sony eats the majority of the pricing for Cell.

As far as Toshiba goes, Cell's fairly useless for TV's, there's nothing Cell can do that a general purpose processor can't do as well or better for TV's. If Toshiba's using Cells, they're using Cells with few working SPE's they're getting for peanuts because they're starting to pile up in IBM's warehouse. Don't mistake "Using Cell" as meaning that it's a full fledged 8 SPE processor, it can easily be a 4 SPE processor. Happens all the time, in fact NVidia does it frequently, using video chips with only half the working pipes as bargain cards instead of tossing them out.

Cell's a problem, one that could seriously impact PS3's adoption. Even though I prefer BR as the HD solution, IMO any assessment of the market must be made without consideration of PS3. I think there's too many issues with PS3 for it to have an impact on the HD video market, most of which center around Cell.

 

[Rob_Walton]

There are a number of assumptions in that analysis that don't seem to hold true. The first is the issue of yields, which was only stated as 10-20% for all 8 processors being viable. The PS3 requires just 7 of these processors for opperation, with the 8th providing redundancy, so the yields for PS3 capable Cells are actually higher. The second assumption is one of cost, which fails to take into account the other uses of the Cell. The chips which fail to provide 7 capable processors will not all be thrown away, and many will be used in less demanding devices, providing cost savings which can be set against the PS3 Cell bill. Toshiba (co-creator of the Cell) have already jumped on this tack by announcing all their new TVs will include Cell chips. So in real terms the Cell chips are not really providing yeilds in such low percentiles. If more companies decide to use these chips in their hardware we may see prices drop faster than we imagine.

A more worrying issue, in my oppinion, is the paucity of blue diodes currently available. PS3 is going to require millions of them, which will leave the CE manufacturers (of both formats) scrambling arround for the left overs come this fall. Sony and Nichia are the prime manufacturers, as far as I'm aware, so that limits manufacturers (who aren't Sony) to try and grab what they can from Nichia before it's too late.

 

[Kevin. W]

It would all depend on contracts signed, who gets what and how many. If Sony and Nichia can't meet these contract obligations they could be hit with massive penalties. Not good for Sony if there already heavily subsidizing the PS3.

 

[Rob_Walton]

Isn't it more likely the diode producers know their capacity for production and have signed contracts accordingly? Where is the indication otherwise?

 

[Harminder]

Looks like costs aren't going down for the PS3 anytime soon, but are going UP!

Read HERE.

 

[DaViD Boulet]

Dunn's comments may have context in the fall-timetable, but certainly not the present.

We'll have to see what things look like in the fall. By then we should have 50gig BDs for select titles, and will certainly have VC1/AVC on BD along with a host of new hardware... hopefully some lower cost (and better value) options than the $999 Sammy.

 

[RobertR]

Does the idea of the PS3 being the dominant factor in BR bother anyone else? I don't like the idea of PQ and other considerations being determined by the gamer demographic, instead of the A/V enthusiast demographic (I don't buy for a minute that the two are the same). I could just see A/V enthusiast complaints about BR quality, and the response being "you're not important in the grand BR scheme of things". :frowning:

I've seen no hint whatsoever that cheaper standalone BR players will be available by the fall. All the upcoming players I've heard about will be just as expensive or MORE expensive. Have you heard anything to the contrary, David?

 

[DaViD Boulet]

I just mean that *by fall* we might see it available on a case-by-case basis. I would expect over the next year that 50 gig BD duplication gets refined and it starts to make commonplace use similar to what happened with dual-layer DVD.

 

[RobertR]

I really hope you're right!