But from the consumer's point of view, many industry observers think the universal player is a no-brainer. "The market will demand universal players," said Peter Besen, vice president of the consumer electronics group at Broadcom.

And yet the battle between the standards could be decided within weeks, said Doherty, as vendors field sub-$500 players based on one format or the other in time for the holidays. Sony, for example, pledged as many as 500,000 PlayStation3 game consoles -- with Blu-ray drives—at its launch this month, Doherty said. Sony also projected that as many as 5 million Playstation 3 will be shipped by March next year.

Technology issues
For chip manufacturers, meanwhile, making either a front-end or a back-end IC comply with the two competing next-generation DVD formats is no trivial task.

A back-end decoder must be able to handle different operating systems and separate middleware--Java for Blu-ray and Microsoft's HDi for HD. Some HD-DVD players are based on Windows CE, others on Linux. ST's universal player platform, for example, is built on Linux so as to cater to both HD and Blu-ray.

"You need to pay close attention to each spec, anticipate changes in the future and architect a chip with the right partitioning of software and hardware so that there will be a built-in flexibility," said ST's Lagomichos.

Broadcom's Shulsinger said the specs must be compared carefully to ensure that each device supports the more stringent requirements of the two. The specs themselves can be a moving target. Blu-ray Profile 2, for example, requires the system to connect to the Internet and decode two video streams. The chip decodes the primary stream in high definition and the second either in standard or high def, though dual HD streams may soon be required. That would mean "adding more memory to a chip," Shulsinger said.

More difficult challenges include cases in which one format supports items that the other doesn't, Shulsinger said. For example, both formats support the Advanced Access Content System, but Blu-ray requires an additional layer of encryption, known as BD+. An even bigger hurdle is the different programming environments. "It's the underlying software infrastructure that requires the huge effort" to make the decoder chip's software robust enough to work properly in both environments, Shulsinger said.

Both ST and Broadcom plan to enter the front-end IC business as well. ST is working with a Japanese chip vendor that supplies ICs for optical drives. Broadcom is considering partnering with another vendor strong in the optical drive market. It's inevitable that a DSP and the analog chips used in the front end will be integrated into the back-end decoder IC, said Shulsinger.

The optical side looms as a daunting technical issue. "The bottleneck is optical units," said NEC's Niitsu.

Either a dual-format optical pickup unit or two separate optical pickup units would be necessary for any universal player, said iSuppli's Crotty, because each format stores information at a different depth on the disk.

Ricoh, for one, is developing an objective lens that can read and write disks of both formats. NEC has developed a front-end chip set consisting of two processors: the µPC3360, an analog signal processor that controls the optical pickup and reads out data from disks, and the µPD63410, a digital signal processor for data processing such as error correction.

NEC's chip set is designed to control read/write operations and process data from all the disks of 16 formats, including Blu-ray, HD-DVD, standard DVD and CDs.

ST's Nurser predicted that the cost delta for dual drives will become "very low" in 2007. Asked how much, he declined to comment, noting that he received the information under a nondisclosure agreement.

Envisioneering's Doherty also believes that the difference in price for dual drives is relatively minimal. "It's mostly royalties" for each format, he said.

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