Apple Snubs Blu-ray: Why Is Anybody Surprised?

The week-long hangover after Apple’s most recent intro event has uncovered a lot of cranky (former?) Steve Jobs fans:

• They’re angry that the new MacBooks dropped the FireWire 400 interface of their predecessors. While I don’t necessary disagree with Jobs that FireWire’s on its way out, and while I understand the need to maintain some semblance of differentiation from the MacBook Pro aside from a lamely implemented secondary GPU and larger LCD, I do dispute Jobs’ contention that "Actually, all of the new HD camcorders of the past few years use USB 2." My six-month old HDV camcorder (which is still being sold), for example, is FireWire-only (strictly speaking, I ‘could’ also transfer video from it to a computer via a HDMI add-in card such as a Blackmagic Intensity, but that massive uncompressed bit payload scenario isn’t an option for a Mac laptop, either). And plenty of 1394-only standard-def DV camcorders whose tape-only recording medium provides no other to-computer transfer mechanism are still available at retail, too. So I think Jobs jumped the gun a year or more with his claim…then again, he’s not the only one who’s taken creative liberty with words like ‘all’ and ‘any’ of late…
• They’re also upset at the lack of a glare-suppressing matte LCD option for any of the new systems, and
• They’re cranky that none of the new systems contain Blu-ray drives.

On that last point, I encourage the detractors to not hold their breaths. Granted, I understand the confusion…after all, wasn’t it just yesterday that Apple joined the Blu-ray Disc Association board? Actually, it was more than 3.5 years ago. And that’s my point. Apple’s primary focus for video distribution now focuses on an iTunes Store nexus, with Macs, iPods and iPhones, and Apple TVs as standard- and high-definition destinations. For the same reason, I doubt we’ll see Apple-branded displays with built-in ATSC TV tuners any time soon, if ever.

Jobs may claim that ‘Blu-ray is a bag of hurt’, and I don’t disagree (keep reading), but even if it wasn’t, why would Apple incur additional system cost (versus red laser optical drives) that the format’s miniscule market share suggests wouldn’t translate to proportionally incremental revenue and profit…and that would detract from the company’s primary revenue and profit mission going forward? For the content creation professionals and bleeding edge enthusiasts that demand Blu-ray capability, Apple can continue to rely on third-party hardware from companies like Amex Digital and LaCie, coupled with third-party software from folks like Adobe and Roxio.

Frankly, if I was an Apple executive with the power to make such suggestions, I don’t know if I’d advocate for adding native Blu-ray support right now even if I didn’t have the iTunes alternative in my back pocket. I can’t help but laugh when I think back to April, when Sony President Ryoji Chubachi predicted that Blu-ray would garner 50 percent of the optical disc market share by the end of this year. Granted, we have 2.5 months to go, but I’d also urge everyone to not hold their breaths on this prophecy, either.

In spite of the fact that HD DVD threw in the towel eight months ago (and pretty much everyone knew the format was dead a month and a half earlier), Blu-ray’s market share languishes at low single-digit levels and is actually decreasing with passing time (more from Ars Technica). Granted, there are occasional bright spots, in the form of titles that directly target the format’s early-adopter demographic, but the overall picture is pretty grim. Check out the post-Iron Man launch week-later data if you need proof of the big-picture dynamics.

When I hear that the Blu-ray Disc Association is predicting a bullish holiday season, my immediate thought is ‘I’d like to have some of what they’re smoking’. Somebody must have neglected to inform them that we’re in the midst of the biggest fiscal crisis since the Great Depression. I’ve heard all the arguments about how this downturn is going to cause folks to:

• Cocoon at home, and
• Seek out entertainment to distract them from their problems

And I don’t disagree. But that entertainment will need to be cost-effective. And that ain’t Blu-ray.

Sony’s certainly free to hold the line on PlayStation 3 pricing if it wishes, but I daresay few folks are going to be buying $400 game consoles this Christmas. And although Blu-ray backers are pushing standalone player prices near or even below $200 (some even bundled with substantial free-movie coupons, and with disc sets that normally cost more than $100 by themselves…and in spite of no-price-drop claims made by the Blu-ray Disc Association just one month ago), there’s still plenty of living room competition for budget-conscious buyers…i.e. pretty much all buyers nowadays. There’s the conventional red laser DVD player that’s probably already in the living room. And if folks want a taste of high-def without the post-purchase heartburn, plenty of sub-$50 upscaling red laser DVD players will contend for consumers’ scant wallets. True high-def? Nope. Much less expensive? Yup. Good enough for everyone but videophile purists? You betcha.

You know who I feel particularly bad about? The silicon suppliers; in this case, folks like Broadcom and Sigma Designs. In the recent past, I watched plenty of semiconductor companies exit the red laser DVD processor business out of necessity, as prices plummeted and profits evaporated. The price and profit trends unfortunately seem to repeating themselves in the high-def era, only much faster this time. It’s hard for me to imagine any Blu-ray silicon pioneer making up its substantial R&D investment, far from turning an investor-pleasing profit. I could gloat and say ‘I told you so’ (and if you look back at my sizeable Blu-ray editorial archive, you’ll see that I did…over and over again…), but I’m not one for schadenfreude.

Between the ‘good enough’ aspect of upscaled red laser DVD for the masses, the ascendance of alternative online content distribution with comparable quality, and what looks to be a lengthy period of fiscal malaise, I frankly find it possible to imagine a scenario in which Blu-ray will garner even a fragment of its format predecessor’s impressive success. If your crystal ball gives you a different picture, I welcome your comments. Just keep the personal attacks and accusations to yourselves, ok?

p.s…HD DVD player and content sales are still strong, say retailers. And Toshiba just released another firmware upgrade for its long-departed hardware. Strange days indeed.