Optical recording in Japan is focused on the benefits to the customer offered by a removable, low-cost medium. Customers want a recording medium that has a standard format, allowing it to be exchanged with a friend and played easily on anyone's system. Without a strong standard format, customers would not be able to move information from one system to another. A key benefit of the removable medium would be lost.

Over time, as improvements are made in recording technology, customers want to be able to read older versions of the technology in the newer players (backwards compatibility). They also want to be able to write (in a new writer) an older version that can be played in an older player. Naturally, it becomes more and more difficult to meet these requirements for compatibility over many generations of the technology. Most companies attempt to provide compatibility for at least 3 or 4 generations.

Over the past 15 years, Philips and Sony have controlled the standard for the CD family of optical products. These companies have maintained a strong standard with excellent compatibility among new and old generations. On the other hand, for the family of magneto-optical products, the process of agreeing upon a single standard format for the industry has been difficult and slow. The slowness of this process is one of the factors that has made it difficult for the magneto-optical industry to match the 60% per year growth in areal density that has supported the magnetic hard disk industry.

For video optical disks, including the various versions of erasable DVD, the standard setting process has been difficult. The optical industry in Japan is quite fragmented with several competing groups of companies allied around incompatible technologies and/or format standards. The DVD (digital video disk) consortium has selected phase change material for its erasable disks. Although consortium members have agreed upon a single standard for the DVD-ROM, there are two competing standards for the erasable format, DVD-RAM and DVD+RW. In addition, there are several companies with large investments in magneto-optical technology (MO) for erasable optical disks. These companies are hoping to show that MO is a superior technology and that it should be used instead of phase change for creating an erasable DVD optical disk.

The difficult business environment for optical disk manufacturers underlies the difficulty in achieving an industry-wide standard agreement for video disks. For compact disk (CD) technology, the two companies who control the standard, Sony and Philips, are making good profits, while almost all of the other manufacturers are losing money. Hence, many companies believe that the only way to have a profitable business in optical video disks will be to control the standard. Then, the few companies that control the standard will make money by licensing the patents that are included in the definition of the standard format. Also, they will be able to limit the number of low cost competitors by keeping the licensing fees high. (This approach is in contrast to several of the standard setting groups in the tape area, where the licensing fees are minimal and companies compete for profits based on product quality and on added value beyond the standard format, e.g., DDS and Linear Tape Open.)

Published: June 1999; WTEC Hyper-Librarian