Toshiba and Bill Gates are Idiots

Bill Gates, CEO of Microsoft, reclines on his desk in his office soon after the release of Windows 1.0. 1985 Bellevue, Washington, USA

That's right. Toshiba and Bill Gates are Idiots. I've written previously on Mr. Gates stupidity here but the ending of the Blu-ray/HD-DVD format war has really upset me.

Sony realized that the last time they made a better product, Betamax, they lost to an inferior but better marketed rival. [As to why Betamax lost to VHS, there is no shortage of analyses, read the detailed Videotape Format War] So this time Sony decided to come out with an inferior product, Blu-ray, and viola!, would you believe it? they won.

Just as the video format wars have spawned market studies at business schools everywhere, the High Definition format war will one day be the classic case study in technology marketing. There is, of course, the simple answer: Toshiba and Bill Gates are Idiots. Let me explain.

The secret to success of almost every business is distribution. I don't care if you have the cure to cancer, unless you have distribution channels your product will remain unsold and unknown no matter what problem it solves or how greatly the public needs it. Sony luckily, and I say luckily because that corporation doesn't have the sense to do anything correctly intentionally, Sony luckily put a hard drive into every PS3 which enabled every game console to play Blu-ray discs. But it came at a great cost; Sony has lost more than a billion dollars on 8.4 million PS3 consoles precisely because it included Blu-ray capability in the console.

Bill's Mistake

Meanwhile, cheapo Bill Gates had no HD DVD capability on 17.4 million Xbox 360s (except for the more expensive units) although one could buy the player as an add-on unit. Despite the fact that there was a 9 to 1 advantage of Blu-ray capable units compared to HD DVD, Blu-ray discs only sold at most 3 to 1 as many discs as HD. Had Gates put HD DVD player capability in all those millions of Xboxes there is no doubt that HD Discs would have outsold Blu-ray by 6 to 1 and, since Blu-ray players were vastly inferior in features and higher cost to HD DVD players, the format wars would have ended last year with HD DVD as the winner.

Considering the hundreds of millions of dollars in promotional fees that Toshiba paid to studios to choose their format, they could have easily chipped in to have Microsoft preinstall HD-DVD players in all Xboxes. On February 26, 2008, Microsoft announced that the Xbox 360 HD DVD add-on drive would now sell for $49.99, so Microsoft will take a bath anyway - they should have done it earlier. Bill Gates is certainly an idiot. If his 31 billion dollar foundation had lent money to Microsoft to fund the add-on initially, with the proviso that future royalties would be split between Microsoft and Gates' foundation, Bill would have had, over time, gazillions more dollars to waste on the care and feeding of the poor in Africa.

But I suppose Gates has his eye on helping third world peoples, who haven't spent a dime on his software, so he can ignore and have contempt for those of us poor shlubs who actually helped him become a billionaire by buying his products. Thanks a lot. Now we're left with an inferior piece of crap for a player format. What an ungrateful idiot. He doesn't even know that Americans helping Africa is precisely what has put Africa into a deeper hole than it's ever been in before. A busybody as well as misinformed.

### End of my article ###

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