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Wal-Mart HD DVD: To Be or Not To Be?

That is the question. Wal-Mart is officially saying they didn’t pick sides, but their spokesman did also say they expected consumers to pick a winner in the coming months. Currently they sell the $350 Toshiba HD-D1 HD DVD and the $900 Philips BDP900/37 Blu-Ray player. 
But this was a leak and it never was Wal-Mart’s intent to announce to their competitors that they expected to do to the DVD market what they had done to the TV market over the last several quarters. They want to own this market much like they currently own 40% of the regular DVD space. 
Was the Leak Blu-Ray or HD DVD?
There have been a number of folks who argued that the leak didn’t speak to HD DVD but to Blu-Ray. This was put to bed by Fauh Yuan in their retraction of the original post reiterating once again the subject was HD DVD and not Blu-Ray. This shouldn’t have been a surprise as there is no evidence that Blu-Ray licenses are even being offered in China and we knew that HD DVD has been in play there since 2005.  
So Are They or Aren’t They?
Read the translation of what came off of Fuh Yuan’s site:
"We are sorry to correct the statement that we have two million HD DVD players order from Wal-Mart and manufactured by China Great Wall Group," Fuh Yuan said. "The actuality is that we had not received yet. We are asked to provide the schedule to Wal-Mart and cost to determine the quantity even more than two million, if the cost is good enough and timing is correct. So the capacity is under consideration. Any qualified manufactured base group will be welcome."
This says that Wal-Mart has asked a number of companies to bid on building these low cost HD DVD players. What was inaccurate was only that Fuh Yuan had won the bid, they had not, and it is still in play. This, in effect, confirms that Wal-Mart is in fact doing the HD DVD player at an aggressive price with the expected outcome; we just don’t know who is building it yet (probably someone who won’t leak the deal prematurely).  We also now apparently know the initial 2M run of low cost players was understated, perhaps significantly. 
Wal-Mart is simply saying no contract has been signed yet, they refused to answer the questions with regard to what they were doing, and said they expected consumers to pick a winner shortly. They can say this because they have already chosen the winner and with 40% of the DVD market expect to crown HD DVD in the fourth quarter. 
Let’s be clear, this removes any indication that Blu-Ray is in play with Wal-Mart, confirms that Wal-Mart is looking for a $200 player as soon as possible (and probably by the 4th quarter), and indicates that HD DVD will have a massive price advantage and Wal-Mart support by that time. 
We still appear to be looking at the end of this fight by year-end. 

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Rob Enderle
Former Digital Trends Contributor
Rob is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. Before…
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