HDOM - A Rebuttal

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For those of you who did not read Mr. Shawlee’s recent series of articles, his arguments boiled down to two general categories:

  • Engineering challenges were insurmountable, and
  • The market would not accept the cost of the new format.

It would not surprise me if Mr. Shawlee is the owner an extensive laser disc collection.

I agree with Walt that high density optical media (HDOM to use a standard neutral acronym) standards may not yet be ready for the current market. To claim that they will never be ready is a bold statement. Given that I am neither Donald Davidson nor one of his students, I take issue with this.

People want to watch movies at home. As has been proven by the transition from video to DVD, they want to do it in as near to original quality as possible. Ceteris paribus, all consumers will prefer high definition video to standard video.

Thus, HDOM has an advantage the market places a premium on. As early adopters begin to accept the premium, the premium will decrease. With a lower premium, more consumers will adopt the standard. Exactly the same process occurred with DVDs and LCD monitors. Eventually it will happen with an HDOM standard.

Returning to what Mr. Shawlee said, he did not dispute the fact that the engineering challenges can be overcome. He believes the real problem is that it will cost more than it’s worth. The first question I would have then is what is it worth? There is a fairly simple answer to this:

If the market demands it and it is less expensive than the alternatives, it will sell.

When Walt was calculating the price of HDOM, he only used a single metric – this was cost per unit storage. This metric is only important for individuals concerned with bulk data archiving. For this purpose I very much agree with Walt – we have crossed the threshold where it is less expensive to archive on hard disk than optical media.

The problem is this market only accounts for a small portion of the optical discs manufactured. The primary use for optical discs – the reason they were invented back in 1958 – is to distribute media. This market is what will determine the success of a new optical format. The media in question for HDOM is high definition film (and to a lesser extent video games).

At present there are three alternatives to using HDOM for this purpose. The first is to use a whole lot more standard optical media. So long as HDOM is less than 5 times the price of standard DVD, this option does not make sense.

The second option is to distribute information via the internet. Lets say you want to purchase five high definition movies – which is faster, downloading 125 gigabytes over bit torrent or walking to the store to buying them and walking back? This is, of course, to say nothing of the cost of the bandwidth. Transferring information over the internet makes a great deal of sense for small files but the price advantage is quickly lost as the file grows.

The final option is, as Walt suggested, to simply use hard disks. Per gigabyte they are much less expensive. Unfortunately it is difficult to purchase half of a hard disk. When you get it home it is going to be a little off balance. Hard disks have for the past decade or so maintained a per unit price of around $100. This means to purchase a movie on hard disk it will cost at least $100. This makes the $30-$40 an HDOM film costs seem much more reasonable.

This is not to say there are no problems with HDOM media. Every point Mr. Shawlee made remains quite valid. There is still a problem with bit rot, the players and associated TVs still cost a lot of money, and the yield rate is still sub par. Considering the potential market though, companies can afford to invest a great deal of money into solving these problems.

There are two facts that give me good reason to believe they will not need to:

  1. The players work, and
  2. A significant number of discs work.

This means most of the difficult engineering is finished. As it is an economy of scale, the cost of players will come down as production increases. Improving the yield rate on the discs is simply a matter of refining the process, not re-inventing it. Like the players, these too will come down in price.

The great stumbling block to scaling this economy, as Walt noted, is the fact that few people have HDTV. While they are still expensive, HDTVs are now in the range where most people looking to replace their existing TV can afford to upgrade. Given enough time, HDTVs will eventually replace standard TVs the same way LCDs are replacing CRT computer monitors.

The technology may have been released early – there still are certainly a few bugs to be worked out. But these challenges are by no means insurmountable. Like all new standards in their infancy, HDOM still costs a lot of money, but like all new standards, these costs will begin to come down as more (decidedly wealthy) people adopt the standard. Eventually this will come down to something we in the proletariat can afford.

The bottom line is consumers want high definition home movies and HDOM is the least expensive way to deliver it to them.

Ian Anderson

Copyright Ian Anderson 06/24/2007 – All rights reserved

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