To anyone following this HD format saga the game just got more interesting-almost. At the DVD Forum in Los Angles yesterday, Microsoft finally showed off its external HD-DVD drive made exclusively for its popular Xbox 360 game console. Gamers and AV early adopters have been waiting for this external box that plugs into the latest Microsoft game hardware. When attached to the Xbox, the device will serve double duty in both game and HD film delivery to an HDTV display. But Microsoft failed to answer two burning questions, the price for the external drive and the ship date. All we can say is: You gotta be kidding me.

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly

At the show Sr. project manager for Microsoft, Kevin Collins, would only go so far as to say the device would be one of the least expensive HD players on the market and available in time for Christmas.

What we do know is the Sony PS3 with embedded Blu-ray player is expected in the same time frame at an announced $599 and the already shipping Xbox 360 sans HD player sells for $399. To keep pricing of the Xbox 360 plus external HD DVD drive at the Sony PS3 level that would put the MS external HD-Drive at about $200.

But if MS wants to offer the lowest cost HD DVD solution, then it needs to match or better the cost of the Toshiba HD-A1, which is selling for $499. Since the MS solution is a package combo of Xbox 360 and external HD DVD drive, and the Xbox 360 goes for $399, the external HD DVD drive would need to come in at a sub $100 price point.

This reasoning was confirmed in a recent "Major Nelson" podcast (aka Larry Hryb, Microsoft’s director of programming for Xbox), who was quoted saying "…it’s going to be the cheapest HD-DVD player you can buy."

Sony is banking on the success of the PS3 to help jumpstart its Blu-ray initiative but from the MS viewpoint it is an opening to be exploited. Case in point, MS director of global marketing Albert Penello was quoted today in that same Major Nelson podcast saying: "How do you want to pick your next-generation DVD format? We’re not forcing consumers to buy something that may be obsolete, or forcing them to spend a lot of money on something they don’t want. We’re not betting our whole console on an unproven media format."

Our take: Microsoft isn’t a company that leaves money on the table, but they are known to invest heavily in new technology until it takes (or fails); so a $99 external HD-DVD player could not only give a huge boost to the HD-DVD format but may help drive a new wave of Xbox sales into mainstream AV consumer demographics not likely to otherwise purchase a game console.

Hats off to Microsoft planners for the savvy play in decoupling the HD DVD player from the Xbox 360 console. By doing so, the company can take shots at Sony "forcing" consumers to choose "an unproven media format." And, decoupling allowed Microsoft to come to market much sooner with it Xbox 360 (they made a big splash at E3 last spring), while offering upgrade package just in time for Christmas. Competitive marketing just doesnt get any better than this. –SS