Obviously the fallout from Warner’s exclusivity to Blu-ray announcement was huge this weekend at CES, but one aspect I found most interesting is Bill Gates’ comments on the issue. In a Q&A with Reuters [via Silicon Alley Insider], Gates made the following statements when asked his thoughts on Microsoft’s role with HD-DVD given that Warner Brothers is now backing Blu-ray:

“Certainly we supported both Blu-ray and HD DVD as Windows peripherals.”

Which seems to want to distance Microsoft from the fact that they are very much an integral part of the HD-DVD group. Clearly Gates hopes we don’t remember articles such as one over the summer in The New York Times which called Microsoft:

“the most prominent technology company supporting HD DVDs”

But even more interesting is this:

“I think the real competitor in the long run is digital (video) download. Just like in music, it is going to be the biggest of the three.”

I’ve long held the belief that if neither Blu-ray or HD-DVD can establish themselves in this format war in a reasonable amount of time, digital downloading could swoop in as the lesser-talked-about 3rd option and take over. That said, I am also not a major backer of one of the two major formats – as Microsoft IS despite their rhetoric. If for some reason you needed more a sign that HD-DVD was in real trouble, look no further than Bill Gates’ comments – Microsoft has just given itself an out so they don’t look like a loser here.

The reporter realizes that Bill Gates is dramatically downplaying his company’s role with HD-DVD and calls him on it:

“You kind of sound agnostic about the formats.”

To which Gates’ replies:

“No, not really. We have definitely worked with HD DVD in a very strong fashion.”

But in the very next sentence continues on:

“Our codecs and HDi are available on the other format and we are a leader in digital download so we have some involvement in all three approaches.”

And goes on to once again reiterate:

“In the long run, people don’t want physical media.”

To me all of those seem about as damning of statements as you can get. I’d stop just short of calling it a strong vote of no-confidence in HD-DVD from Microsoft. That’s how big the Warner/Blu-ray announcement was.

So I guess we can rule out those Xbox 360s with HD-DVDs drives built-in then?

More thoughts:

• Blu-ray Close To Exclusive With Warner Brothers – The Death Blow to HD-DVD?
• The Console Wars Have Spread To HD-DVD Vs. Blu-ray
• Paramount and Dreamworks Pick HD-DVD, But Spielberg Refuses To Do the Same
• Blu-ray/HD-DVD War To Heat Up Even More: Apple Entering the Fray?
  
• Does Warner Brothers Know Somthing About a MacWorld Blu-ray Announcement?
• HD-DVD and Blu-ray To Coexist Peacefully By 2012? I Say No Way.