[reaperducer]

I still have some swag from when Microsoft was convinced that HD-DVD was going to beat Blu-ray, and become the preferred information delivery mechanism for business and entertainment because the internet was "just a fad."

One of the items is a large, metal, locking suitcase like you'd see in an old spy film with the logos on it. I use it to store important paperwork.

[ascagnel_]

I don't think Microsoft ever believed that HD-DVD was going to beat Blu-Ray. Instead, I think they saw the long view around online video delivery (they had a digital storefront up pretty quickly after the console launched) and backed what they viewed as the losing format in an attempt to split the market and prevent either format from fully establishing itself so that the online transition would happen faster. They also failed to capitalize on the opportunity, largely because they also failed in the personal media player (the Zune was good, but _very_ late to market) and phone markets.

[tenebrisalietum]

From https://en.wikipedia.org/wiki/HD_DVD:

> One of the issues was that Blu-ray Disc companies wanted to use a Java-based platform for interactivity (BD-J based on Sun Microsystems' Java TV standards), while HD DVD companies wanted to use Microsoft's "iHD" (which became HDi).[20]

Microsoft had a direct interest in HD-DVD succeeding as it could sell iHD dev kits and licenses.

Edit ... maybe not, as I read on the article looks like Microsoft didn't actually provide tools so ... not sure then.

[scarface74]

VOD makes pennies for the seller even at what were then Apple volumes of sells.

VOD “is a feature not a product”. It’s table stakes to make your product more desirable. It’s not a profit center on its own.

See also: streaming music

[ascagnel_]

Today, paid VOD isn’t a very lucrative market. In 2005, Apple had the music industry in a vice grip with iTunes/iPod, and it seemed like video was going to go the same way. It didn’t happen, not because of the technology, but because of the business model (subscriptions).

[ltbarcly3]

Nope, they aren't spending a billion dollars on some wild longshot strategy to try to make streaming a thing when 90% of thr country was on dialup, and the best video codec an average computer could decode was mpeg2 at 480p. Nope.

[rob74]

According to Wikipedia:

> The high-definition optical disc format war was a market competition between the Blu-ray and HD DVD optical disc standards for storing high-definition video and audio; it took place between 2006 and 2008 and was won by Blu-ray Disc.

by then, DSL was already well established, and according to this graph https://www.statista.com/statistics/616210/average-internet-... the average internet connection in the US was 3.67 Mbps - much slower than today, but much faster than would be possible if 90% still had 56 kbps. Doesn't make GP's conspiracy theory any more likely, but just for context...

[ltbarcly3]

You are right, it seems that about 80% of internet users had broadband in 2008. However, about 40% of people in the US were still not users of the internet and 10% were still on dialup. I don't know if the average speed means much in terms of addressable market for streaming (if 1% of the people in the US have gigabit connections, the average is 10mb even if 99% of people are on dialup), but I couldn't find any statistics on the median internet speed.

[anthk]

Back in the day people used DivX ;) and XVid.

[JosephRedfern]

> .. and become the preferred information delivery mechanism for business and entertainment because the internet was "just a fad."

Was it not as much a case of network limitations making such delivery impractical, rather than the internet being considered a fad? I was just about on 512Kb DSL at that point (if not, dial up). Downloading games and streaming movies would have been totally impractical.

[reaperducer]

Was it not as much a case of network limitations making such delivery impractical, rather than the internet being considered a fad?

The internet being a passing fad was just how Microsoft thought in those days. Remember that Windows didn't get built-internet access until around Windows 98, while Macs were on the internet almost a decade earlier. I used a Mac to access USENET at a college in 1989/1990.

It wasn't about bandwidth limitations, but about Microsoft's long-term goal of moving everything to a subscription model. MS was preaching the virtues of "recurring revenue" decades before most of the rest of the tech industry figured that out. Microsoft's philosophy was that people would subscribe to information services like Encarta, that would deliver regular updates on optical disc via the mail.

A lot of people, at the time, believed that Windows would eventually go to a full-subscription model where you'd pay a monthly fee to use Windows, even on your own machine. The notion was that people don't like paying $200 for the next version of Windows, but they would be less unhappy paying $20/month, or even $10/week.

That was ruined by a number of factors, including free Linux, Apple delivering operating system updates for free, and of course, the internet delivering the equivalent of Encarta and all of Microsoft's other planned information subscriptions for free.

[zokier]

> Remember that Windows didn't get built-internet access until around Windows 98, while Macs were on the internet at least half a decade earlier.

IE came bundled with Windows since 95 OSR1, and I'm pretty sure 95 had built-in tcp/ip stack since launch. In contrast Macs got bundled MacTCP in System 7.5 (1994), and Apples early web-browser forays (Cyberdog) were notably short-lived.

Furthermore MS invest heavily on stuff like MSN pretty much from the get-go. And of course can't forget IIS/ASP, one of the most popular web platforms during its heydays.

More relevantly to the topic at hand, Xbox launched with Xbox Live pushing console internet connectivity and multiplayer well ahead the curve.

Are these really signs of company thinking internet being a fad?

[reaperducer]

IE came bundled with Windows since 95 OSR1,

IE wasn't built-in to Windows 95, it was part of the Plus Pack — an optional add-on.¹

I'm pretty sure 95 had built-in tcp/ip stack since launch.

Winsock was an add-on. It wasn't included with Windows until Windows 98².

Apples early web-browser forays (Cyberdog) were notably short-lived.

Apple's Cyberdog is irrelevant. There's a lot more to the internet than web browsers, and people on Macs were there.

¹ https://en.wikipedia.org/wiki/Internet_Explorer

² https://en.wikipedia.org/wiki/Winsock

[zokier]

I can link to wikipedia too:

> Windows 95 OEM Service Release 1 was the first release of Windows to include Internet Explorer (version 2.0) with the OS. While there was no uninstaller, it could be deleted easily if desired. OEM Service Release 2 included Internet Explorer 3. The installation of Internet Explorer 4 on Windows 95 (or the OSR2.5 version preinstalled on a computer) gave Windows 95 Active Desktop and browser integration into Windows Explorer, known as the Windows Desktop Update. The CD version of the last release of Windows 95, OEM Service Release 2.5 (version 4.00.950C), includes Internet Explorer 4, and installs it after Windows 95's initial setup and first boot are complete.

https://en.wikipedia.org/wiki/Windows_95#Internet_Explorer

> Version 1.1 of Winsock was supplied in an add-on package (called Wolverine) for Windows for Workgroups (code named Snowball). It was an integral component of Windows 95 and Windows NT from versions 3.5 and onwards

https://en.wikipedia.org/wiki/Winsock#Microsoft_implementati...

[kevin_thibedeau]

Win95 had IP networking from day one. The drivers weren't installed by default but they were available from the control panel networking applet.

[jerf]

A company the size of Microsoft making some peripheral investments can dwarf what entire startups might be able to invest.

But it was clearly not central to Microsoft's strategy for a long time. It's not like this is a whacky theory; their plain lack of focus on the Internet is matched by their own corporate statements about how they weren't focusing on it particularly. They got there, but they were slow to the party. They had to be forced. They had to go through some phases of attempting to embrace and extend the entire Internet, which they mostly failed at but did have a pretty good run at with Internet Explorer (though they still lost that one eventually).

Their core strategy was to focus on Windows and Office, but at the time they focused on the network as a threat to those things. They perceived the web as a threat because you don't need an OS if you just have a browser, and for as much as we today do on the web, including Office, they were afraid we'd do even more, like, do literally everything in a browser, and that the future was Chromebooks; specifically, machines with no Windows and no Office. Existential threat to a two-legged Microsoft. Prior to the internet being able to sensibly run an office suite they were also afraid that we'd all switch to some inferior product that was based on what the web could run, and they wouldn't be able to charge anywhere near as much. They saw the internet as an existential threat for a long time, not an opportunity.

So while they knew they couldn't kill the internet as a whole, and they put down some small side-bets that even if they paid off could never have sustained a company the size of Microsoft, they generally were attacking the internet and trying to embrace & extend it. Now they don't do that anymore and they generally understand it as an opportunity as well. But there was a long run where Microsoft saw it as a threat overall, even if they invested here or there. This seems to have come from Steve Ballmer, but that approaches the limits of my knowledge; people who were there could speak to that better.

[stewx]

Photos please!