John Dawson: Inventing The Future—Properly

"This won't be a short job," says Arcam's president, John Dawson (footnote 1). He's talking about the challenge of engineering the next generation of Arcam home-theater products to embrace the new high-resolution video formats. It's possibly the biggest technical challenge English company Arcam has faced since, almost exactly 30 years ago, Dawson and his original business partner, Chris Evans, launched their first product—an unpretentious, 35W hi-fi amplifier called the A&R Cambridge A60.

It was Dawson's own personal combination of technical know-how and commercial enthusiasm that got Arcam off the ground in the first place. In the years since, the company has embraced new technology with an alacrity unusual for a specialist hi-fi maker.

In the mid-1980s, Arcam learned how to build better-sounding CD players, and introduced one of the first separate digital-to-analog converters. In the early 1990s, its NICAM tuner introduced hi-fi users to high-quality stereo sound from UK television broadcasts. In 1992, with the arrival of Dolby S noise reduction, Arcam launched a high-quality, UK-made hi-fi cassette recorder—although the market in high-end cassette decks was killed soon after by the announcement of the Digital Compact Cassette (DCC) and MiniDisc. In 1998, Arcam was first with a DAB digital radio tuner for the UK, European, and Canadian markets. And in 2000, Arcam launched its first DVD player, followed in 2002 by a state-of-the-art A/V processor.

All of this has been made possible by a high level of in-house expertise, and by effective collaborations with key semiconductor companies.

John Dawson: There is a symbiotic relationship between the chipmaker and the specialist companies like us, who need the help of the chip companies to develop a variation of the product that, hopefully, will have something special about it. Most of my job today is in brokering these relationships, identifying the right people—finding the ones that will be enthused to work with us. Our engineering team is clearly getting recognition as a world-class team because the products we've done are pretty good, and that really helps.

Steve Harris: But the latest format war of HD DVD vs Blu-ray makes things doubly difficult for specialist companies.

Dawson: It is staggering that these two groups weren't able to get themselves together. Too much corporate pride, too much patent and intellectual-property income in the way. And deep rivalry between Toshiba, who snatched the DVD business from Philips' and Sony's patent pool, and Philips and Sony—Sony in particular, who really didn't want that to happen a second time around. I do have opinions on which is more fit for purpose as a replay medium, and it's not Blu-ray. But that is irrelevant. We have to see how the market develops. It's going to be very confused for quite a while.

The situation at the moment is that we have a very successful format called DVD, which is selling fantastically well. We also see, particularly in the USA and Japan, increasing amounts of high-definition video material from broadcast. And we see mainstream display technology rapidly developing to support better quality—and, much more important, to be much less intrusive. We are just going to have an explosion of people replacing their old televisions with flat-panel displays. In the UK we're in the process of embracing high-definition broadcasting via satellite, through Sky initially, and including programming from the BBC and others.

So the movie industry wishes to support high-definition video on disc as well. The problem is that unlike DVD—where there were two initial proposals, but with some head-bashing they were integrated into one physical format—in the case of high-definition DVD, there are actually two versions in production, which use physically incompatible discs. One, HD DVD, uses an extension of the existing DVD format for its discs: two 0.6mm discs sandwiched together with the information in the middle. With a blue-violet laser that gets you 15G Bytes per layer, about three times that of DVD. Blu-ray puts the information very near the reading side of the disc. That's the opposite of CD, in fact, where the information is almost all the way through the plastic.

As I understand it, BD (Blu-ray Disc) was developed not as a ROM, a playback-only medium, but as a recording medium for Japanese high-definition television broadcasts. And because high-definition television in America and Japan is based on the older and relatively inefficient MPEG-2 video codec, you need very high data rates and lots of disc space to support the programming. To get this space—25 gigabytes per layer—on a 5" disc you need to put the laser very close to the disc's surface, which introduces a whole new set of problems.

It turns out that Europe's high-definition broadcasting will run on more modern video codecs needing approximately half the space. So with these new codecs, VC-1 and H.264, there is no longer a need for all that amount of space in a replay or ROM format. But BD had already invested the time and effort in getting this to work for MPEG-2 video as a recording format—although all you can do is record off-air; you can't record off disc because of copyright issues—and they've now tried to adapt it as a replay-only format.

The HD DVD specification proposed by Toshiba and its partners and endorsed by the DVD Forum is a substantial extension of today's DVD format. It's much cheaper to replicate the discs—you can modify existing production lines—and it's less hard to make the players. The disadvantage, if it has one, is less playing capacity, but with a modern video codec, that doesn't get in the way. With BD, you need totally new disc-manufacturing lines and more complex optical pickups, both of which add significant cost.

So we have the two sides squaring off to each other, and you can say, legitimately, that this is insane. And that is a real dichotomy for companies like us, because although we'd like to support this area, it's going to be challenging in the first place to support even one format. So what is the way forward right now? I really don't know. We have to watch and observe and see how it shakes out.

A company like Arcam has a position to defend with the highest-quality DVD players, and we continue to work on that format, because it's not done and dusted yet. If you as a consumer want the best video and audio performance from a video-disc player at this time, there is a case to be made for just spending the bulk of your money on a DVD player! This is particularly true now when there are two formats coming up, and both are in their very early phases and will undoubtedly be flaky at the beginning, as we are already seeing. Both systems are four or five times more complex than DVD because of all the extra interactivity they want, with Net-sourced video and so forth, which is going to be very challenging in software terms.

Harris: And another reason for the complexity in the new formats is their copy-protection systems.

Dawson: AACS [Advanced Access Content System] is the content-access control system for both Blu-ray and HD DVD, and it is very powerful, much more powerful than CSS [Content Scrambling System], which was put together for DVD. CSS, as you know, was cracked because somebody in the computer industry was careless and left the keys exposed. A company implementing it didn't follow the rules. Nevertheless, the genie was out of the bottle, and the Hollywood boys sure don't want that to happen again.

AACS is not completely agreed yet—they're still arguing about the specs. An interim working spec for the players has only just become available. The HD DVD spec itself became available to companies like Arcam at the end of last November, and we have that. Including the appendices it's about 3" thick. The Blu-ray spec for players was even later [February 2006] and is even more daunting, because it has even more interactivity specified in it. It also has another layer of security on it, called BD+. When they record some video material that is content-protected for Blu-ray, it first of all gets scrambled by BD+, then it gets rescrambled by AACS. So when you replay it, it gets descrambled by AACS; it's still then unreadable, so it has to be descrambled again according to another set of rules by BD+, which looks around to make sure the player is secure and the environment is secure.

Footnote 1: John Dawson is still a shareholder in the company he cofounded, but has relinquished the running of Arcam to managing director Charlie Brennan, operations director Michael Sheridan, and financial director Alan Wylie, who all bought into Arcam in 2004. Jacky Cross, who in earlier days co-owned the business with Dawson, remains a shareholder, and still works with Arcam as IT and special projects manager. Arcam has an annual gross of around £13 million ($25 million) and employs around 90 people. Research and development is in the hands of a large team of hardware and software design engineers.