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A Blu-ray Xbox? Don't count on it - March 11, 2008

Much has been made of Steve Ballmer's recent acknowledgment that Microsoft will "support Blu-ray in ways that make sense." Probably too much. Ditto Stan Glasgow's revelation that "discussions" are underway between Microsoft and Sony about incorporating a Blu-ray drive into the Xbox 360 to replace the now-defunct HD DVD strap-on Microsoft was selling. "Discussions" can mean a lot of things in corporate PR-speak. But one thing I suspect it does not mean in this case is that an Xbox Blu-ray strap-on is coming anytime soon.

An internal Blu-ray drive for Xbox, I think, is out of the question. It would add significant cost to the system at a point in the lifecycle of the platform where Microsoft is looking to take as much cost out of the box as possible in order to meet growing retail price competition. Why would it want to narrow Xbox's current price advantage over Sony's PlayStation 3?

The drive would also be useless for games, since developers who published on Blu-ray would be cutting themselves off from the base of Xbox 360 consoles already in the market that do not have Blu-ray drives. That means Microsoft would be adding significant cost to the system solely to support movie playback.

Further, adding an internal Blu-ray drive would mean adding support for BD-Java and BD+, two technologies Microsoft labored mightily to try to keep out of the next-gen DVD formats. I doubt it's going to invest the developer time needed to add those technologies to Xbox now.

Even the introduction of an outboard Blu-ray drive seems like a stretch. Microsoft certainly won't get the kind of price break out of Sony that it got from Toshiba, which means the drive would likely have to sell for at least $150 and probably more. And even with an add-on, Microsoft would still have to deal with supporting BD-Java and BD+. Perhaps a way could be found to include such support in the drive, rather than adding it to Xbox itself, but that add even more to the cost of the drive.

Bottom line: I just don't see any strategic reason why Microsoft would add a Blu-ray drive to the Xbox 360--at least not until it sees evidence that Blu-ray is really driving sales of PS3 to gamers, as opposed to people looking for a low-cost Blu-ray movie player.

The same issue of BD-Java and BD+ support also argues against Microsoft adding native Blu-ray support to Windows Media Center.

So what was Balmer talking about? I doubt he has in mind much more than adding a Blu-ray driver to Windows (a no-brainer at this point) while leaving full playback support to third-party developers. I'm sure Microsoft also stands ready to renew its previously spurned offer to optimize its VC-1 encoder for Blu-ray (another no-brainer if studios want to continue using VC-1 for high-def).

Beyond those obvious steps, however, I wouldn't expect to see a wholehearted embrace of Blu-ray by Microsoft.


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