Originally Posted by Video Business
Sony certainly has reason to be concerned about price pressure.
The price cut announcement came in the same week that the Steering Committee of the DVD Forum, on which Sony sits, gave formal approval to specifications for a “China-only” version of the HD DVD format.
It also approved the licensing of the basic DVD specs for incorporation into the China-only HD DVD formats, pending the formation of an appropriate licensing entity.
THE ONLY SIGNIFICANT difference between the China-only HD DVD and the version used in the rest of the world is the codec used to encode content.
In the rest of the world, HD DVD supports VC-1, H.264 and MPEG2. The China-only version supports only the Chinese-developed Advanced Video System (AVS).
In nearly every other respect, including the physical specifications of the disc, the interactive layer and the optics, the two versions are identical.
The purpose of the China-only version is to spare Chinese manufacturers the licensing fees associated with the global codecs on decks sold in China and to help propel China into the ranks of technology developers, rather than simply manufacturers.
But manufacturing HD DVD players they will be. And once those production lines are up and running, swapping out the codecs for their outside OEM clients is no big deal.
In other words, HD DVD just secured the inside track on a potentially vast new market. The economies of scale that could result from China’s embrace of HD DVD is likely to have significant impact on retail prices in every market that sources its electronics from China—that is, the rest of the world.
HD DVD players mass-made in China can be modified to work in the US by swapping one single decoder chip. And if you look in any electronics store, most of the electronics are made in China. Heck, my $5000 of high end Parasound gear are made in China.
Bring on the $200 HD DVD players