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Which One's the Eight-Track?

June 07, 2005

Remember the VHS/Betamax war? It wasn't pretty. Hollywood and consumer electronics firms failed to agree on a home video recording system standard, so two competing and incompatible formats emerged. Consumers had to bet on which would survive, with the losers -- Betamax buyers -- being stuck with tapes that could never be played in newer machines. And now the whole mess appears to be happening again.

Powerful camps led by Sony Corp. on one side and Toshiba Corp. on the other are pushing incompatible versions of next-generation DVD systems that will include discs capable of holding high-definition movies. Rather than putting the interests of consumers first by agreeing on a single standard, Sony and Toshiba are focusing on their own bottom-line interests.

Sony Corp.'s Blu-Ray DVD is supported by Pioneer, Matsushita's Panasonic, Samsung, Apple and others. Toshiba's HD DVD counts NEC and Sanyo as supporters. Hollywood studios are split, some forging alliances with Sony and some with Toshiba. Big money is at risk, so both camps have dug in deep and are lobbying hard.

Reason still might win out. In April, a Japanese newspaper reported that Sony and Toshiba were in closed-door meetings to discuss a compromise. But absent an immediate truce, the first generation of new machines will move into the market in time for the holiday season, leaving early adapters to place their bets on one technology or the other.

A years-long war makes no sense for the industry or consumers. Movie studios already have digital pirates to worry about. Now they risk alienating customers by joining in a format war.

The uncertainty will also dampen interest in the new products, hurting electronics makers and retailers.

Our advice if a truce isn't quickly forthcoming? Don't buy anything at all until one side waves a white flag.

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