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Thursday, September 6, 2007

Why Blu-Ray Should Never Have Existed: Technology Lesson Learned

A number of experts are pointing out why Blu-Ray is a mess. In hindsight, Blu-Ray should never have existed. Looking back at what happened with this technology can help us avoid similar mistakes in the future with a variety of products.

Today I'd like to cover the warning signs and point to Blu-Ray as the current example of a problem product that can crop up in any company, from IBM to Microsoft.

Now, I know a lot of people still believe Blu-Ray is winning (though that number declined sharply after Paramount and DreamWorks jumped ship), but if you really step back, you'll realize all it is doing is ensuring HD-DVD doesn't win either, and the impact of that on the movie industry has to be in the billions.

Danger Sign One: It Can't Stand on Its Own

I've seen this over and over again, and am surprised more of us don't point this out. If a product requires substantial support from the parent to keep it alive, including funding levels that probably can't be reasonably recouped, it has a very high likelihood of failing.

Successful products generally need some boost in terms of marketing and backing, but if they need sustained investment over long periods of red ink, at some point there is likely to be an executive change, and the new guy will immediately realize that the product needs to be killed.

We saw this years ago with OS/2. The level of investment was unprecedented, and to keep Louis Gerstner, the CEO who was brought in to turn IBM around, from killing it out of hand, he was maneuvered into publicly promising to support it indefinitely. Shortly thereafter, he killed funding for the offering quietly, leaving a lot of companies that had listened to the empty promise hanging in the wind.

With Blu-Ray, the warning sign was the tie-in to the PlayStation 3, which was the big crutch for the product. I was just as blind to this early on as everyone else, and didn't realize until too late that rather than the PlayStation assuring the success of Blu-Ray, Blu-Ray assured the failure of the PS3.

A product has to hit on three vectors: it has to work to expectations, it has to be something people want, and it has to be affordable. The fact that it wasn't affordable killed not only Blu-Ray but effectively took out the PS3 in the process. Without the PS3, Blu-Ray couldn't beat HD-DVD, which had no similar crutch and advanced into the market much more easily (and shipped much earlier).

Danger Sign Two: Key Competitive Advantage Unimportant

In the case of competing technologies, there are advantages and disadvantages between the products. For instance, in the case of Windows vs. Linux on the desktop, the key advantage is that Linux is open source which, to the average Windows user, is not only unimportant - when explained it might actually scare them away from the offering. Apple, on the other hand, is providing advantages consumers at least want, and is showing considerable success at the moment.

For Blu-Ray, the big advantages seem to be capacity and special features (something HD-DVD shared). On capacity, the reality was that you really didn't need as much as Blu-Ray offered for movies; since game developers (most of them) develop for several platforms, they were limited to standard DVD capacities, anyway. For backup, initially they had an argument, but with the growth of storage and the speed of writing to optical discs (which is very slow), both HD-DVD and Blu-Ray became impractical as backup and transport media for PC files. Portable hard drives are cheaper, easier to use (all you need is a USB port, not another Blu-Ray drive at the other end), vastly faster, and actually more portable.
For special features on Blu-Ray or HD-DVD movies, folks simply didn't care. They just wanted to watch the movie. So arguing who had the best features quickly became a waste of time.

So Blu-Ray was better, if the buyer doesn't care, it doesn't make any difference, and the vendors who haven't yet learned that lesson are way too prevalent.

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