I'll Start with the Summary:

Description (the battle begins):

Blu-Ray and HD-DVD are two new optical storage technologies that fight as the successor of DVD. With the introduction of high-definition TV (HDTV) DVD storage capacity showed to be insufficient to this application. DVD supports a resolution up to 720x480 pixels, while HDTV works with resolutions as high as 1920x1080 pixels. Just to give you an idea, two hours of high-definition video with data compression requires 22 GB of storage space. Keep in mind that the maximum capacity of a DVD is of 17 GB, if a DVD-18 disc is used (keep in mind that this is a dual-sided dual-layer disc).

So how to allow a higher data storage capacity in order to support high-definition contents? Here is where two DVD successor candidates enter the scene: Blu-Ray and HD-DVD.

In fact a Blu-Ray or a HD-DVD is a DVD disc with a higher storage capacity, allowing you to store high-definition contents. It is important to remark that the main motivation to the creation of a DVD successor was the introduction of HDTV, which requires a higher disc storage capacity than a regular DVD can provide.

But how is a Blu-Ray or a HD-DVD disc able to store more data than a DVD disc?

Technical specs (good geek stuff):

Main entertainment-related companies (i.e. movies and games) that support each technology:

Background of the Technology (really, this isn't as boring as it looks!):

Blu-Ray technology was developed in February 2002 to be DVD’s successor by a consortium made by companies that include Apple, Dell, Hitachi, HP, JVC, LG, Mitsubishi, Panasonic, Pioneer, Philips, Samsung, Sharp, Sony, TDK and Thomson. HD-DVD, on the other hand, was created by Toshiba and recently got support from Microsoft, HP and Intel.

Both Blu-Ray and HD-DVD discs have the same physical size of DVD discs (and CDs), with a diameter of 12 cm (120 mm, around 4 ¾”).

The key to both Blu-Ray and HD-DVD technologies is the use of a blue-purple laser to read and write data from the disc. This laser has a smaller wavelength compared to the red laser used by DVD players, allowing a higher recording density.

During the recording of a Blu-Ray or HD-DVD disc a high-power blue-purple laser is used to burn pits on the disc surface. The areas that weren’t burned are known as lands.

During the reading of a Blue-Ray or HD-DVD disc a blue-purple laser with lower intensity is thrown on the disc surface. When the light reaches a pit it is reflected back with a lower intensity compared when it hit a land. As the pit height corresponds to ¼ of the laser wavelength, the reflected light reaches the photosensor found on the Blu-Ray or HD-DVD player half wavelength dephased (¼ on its way in + ¼ on its way back = ½). This is how the Blu-Ray or HD-DVD player can recognize if an area is a pit or a land: the amount of light reflected by a land is higher than the amount reflected by a pit.

You could think that each spot where the light is reflected with a higher intensity (land) equals to a “1” bit while each spot where the light is reflected with a lower intensity (pit) equals to a “0” bit. However Blu-Ray and HD-DVD players use the transition between pits and lands or lands and pits to represent a “1” bit and the absence of such transitions to represent a “0” bit.

Each bit read this way is called an optical bit. They still do not represent directly a data “0” or “1”. A process known as modulation is still required to convert optical bits into data bits. HD-DVD uses a modulation technique called ETM (Eight to Twelve Modulation), which converts each group of eight data bits (one byte) into 12 optical bits. Blue-Ray uses a modulation technique called 17PP that converts a variable number of optical bits in data bits based on rules defined by the modulation algorithm.

Just like what happens on CDs and DVDs, on Blu-Ray and HD-DVD discs pits and lands are organized into a single spiral track that starts at the center of the disc and ends at the border of the disc. The smaller the distance between the spiral tracks, more data can be stored on the disc. On Blu-Ray discs this distance is smaller than on HD-DVD discs (0.32 µm vs. 0.40 µm, respectively).

Also, on Blu-Ray discs each pit measures 0.13 µm, while on HD-DVD discs they measure 0.20 µm.

But why do HD-DVD discs use bigger pits compared to Blu-Ray if both use a laser with the same wavelength? The answer is the distance between the recording layer and the lacquer layer. On Blu-Ray discs the recording layer is only 0.1 mm distant from the lacquer layer, which allows a higher recording density (HD-DVD discs use the same distance as DVDs, 0.6 mm). On the other hand Blu-Ray discs must be handled more carefully, as any scratch on its surface can easily reach the recording layer, compromising the recorded data. That is why some Blu-Ray discs come inside a caddy in order to avoid physical damage.

As we can see, technologically speaking Blu-Ray and HD-DVD are very similar, the main difference between the two being the storage capacity.

A single-layer Blu-Ray disc can hold up to 25 GB, while a single-layer HD-DVD disc can hold up to "only" 15 GB. A dual-layer Blu-Ray disc can store up to 54 GB, while a dual-layer HD-DVD can store only up to 30 GB.

In the table below we summarized the main technical specs of Blu-Ray and HD-DVD discs.

Sales of Players:

According to Industry sources, the HD DVD format is retaining a lead in the European market next-generation blue-laser optical disc drives/players/recorders. Toshiba's HD-E1 HD DVD player, accounted for an 85% market share in January, leaving Sony and Samsung Electronics equipment for Blu-ray Disc trailing behind with 15% of the European market.

Rising demand for HDTV equipment will boost consumer interest in blue laser HD formats. As more homes turn to HD, the format that can provide the best prices for both hardware and HD content should capture the growing market.

Sales of Disks:

According to figures from trade magazine Video Business, Blu-ray titles outsold HD DVD titles by a margin or about 2:1 in February. Around 250,000 Blu-ray movies were sold in the month ahead of 125,000 HD DVD titles sold. While the boost in Blu-ray sales is no doubt helped by the PlayStation 3 (PS3) sales in North America, sales of the title "The Departed" appear to rule out some other offered reasons for the format outselling HD DVD.

"You can’t look at the last two months as a trend or as what the consumer wants to do in this format... It’s really an artificial, short time period," he said. He also suggested that there are other reasons for Blu-ray's boost in sales, including two-for-one offers made by retailers, and Amazon's 50% reduction on selected Blu-ray titles.