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The upgrade to an iPod is about convenience rather than quality. Basically, I don't see the iPod and SACD/DVD-Audio as being competing technologies.

Certainly, the market for digital downloads (i.e., the iTunes Music Store) and the ancillary hardware (iPods) is radically larger than the DVD-Audio or SACD market. That tells you something about consumers' priorities.

In the long term you can expect that the cheap $50 DVD player will morph into the cheap $50 HD-DVD/Blu-Ray universal player. In the short term, however, would you rather spend your presumably limited toy budget on the marginal quality upgrade from DVD to HD-DVD, or would you rather spend your same toy budget on some kind of VoD/DVR solution that promises you a massive and convenient library of standard-def content?