We're kicking off the first five weeks of 2005 by profiling five promising innovations on the verge of exploding into the mainstream in the new year. It's our way of introducing you to our new Motley Fool Rule Breakers newsletter service, which singles out tomorrow's great growth stocks early in their disruptive stage. That's the point in their development where these products are poised to reshape our lives. It's also the point where a few dynamic, forward-looking investors make decisions upon which fortunes are built.

If you've been eyeing that top-of-the-line DVD player in order to really give your home entertainment system that certain je ne sais watts, let me show you what's behind Door Number You. See, just as you eventually tossed out your 8-track tapes and old vinyl recordings (OK, if you're like me, the wax with the liner notes never really went away), your days with your standard DVD collection are numbered. Rule Breakers know that the rules of technology are always being snapped and discarded, and even the disc you have warmed up to in recent years is about to become yesterday's plaything.

Still with me? You really don't have much time. Two competing technologies offering far more storage capacity than your garden-variety disc will be rolling out over the course of the next year and change, and they already have the blessings of major movie studio and video-game software houses.

Yes, having two rival technologies is not the ideal situation. Blu-ray and HD-DVD discs are worthy improvements in their own right over that DVD you bought over the weekend, yet we all know that technology tends to gravitate to one standard.

Some have compared the upcoming battle between the two blue laser disc formats to the one waged between the Betamax and VHS platforms two decades ago for videocassette supremacy, perhaps because the same company that failed in drawing the masses over to Beta -- Sony (NYSE:SNE) -- is also the same company spearheading the Blu-ray movement.

What's Blu-ray, and why is Ray so sad?
While Sony came up short with Beta, it's got the best chance to come out on top in the new disc war. Blu-ray discs hold 50 gigabytes of storage -- more than 10 times the storage of today's popular DVD disc -- and nearly twice as much as the 30-gig capacity of HD-DVD.

The Battle
Format Storage
DVD 4.7 gigs
HD-DVD 30 gigs
Blu-ray 50 gigs


Superior technology, or in this case capacity, is obviously not enough to win over the market. The reason Blu-ray appears so promising isn't so much due to Sony as it is the company that the format is starting to keep. It looked bleak at the beginning when movie studios, perhaps in a retaliatory move given that Sony has its own prolific filmmaking business, rushed over to announce their support for HD-DVD. Earlier this month Toshiba announced plans to roll out its first HD-DVD recorder by the end of the year -- beating Blu-ray to the sales floor by a few months.

Yet when Disney (NYSE:DIS) broke from the studio ranks to line up on Sony's side, it made it obvious that Blu-ray wasn't going to bow down so easily. In fact, the consortium of companies that are championing Blu-ray includes Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ). Why is that significant? Well, if you have the two leading makers of personal computers on your side, pushing the option of Blu-ray DVD players on next year's batch of desktops and laptops will grow the number of available Blu-ray players significantly.

Perhaps having the computer makers on Blu-ray's side inspired Electronic Arts (NASDAQ:ERTS) and Vivendi to follow suit and proclaim their allegiance to Sony's new platform. So Blu-ray is not simply the most capable platform from a spec sheet angle. It also has the country's largest video game company in EA, the world's leading family entertainment disc producer in Disney, and the two biggest names in the PC industry lending support.

There is always an investing angle
While you may find yourself making a decision as a consumer later this year, the Rule Breaker in you probably wants to know whether there's anything in it for you as an investor. Naturally, there is. Earlier this month Seth Jayson suggested taking a look at Singulus Technologies (NASDAQ:SGTSF), a German company that makes the machines that create the next generation of media discs.

If you prefer to stick closer to home, Blu-ray is poised to have a profound impact on the purveyors of content. It's not just that it will be more convenient to ship out, say, what used to be an eight-DVD set of a popular television series on a single Blu-ray disc. The real meat here is what studios can do with that extra space in terms of hiking the value proposition of buying a disc. You also have the ability for studios to cash in on older releases by repackaging them to take advantage of the Blu-ray's capacity. Companies such as Disney and Pixar (NASDAQ:PIXR) that have respectable libraries of evergreen content should make out nicely.

But it's not just the studios. Dell and HP didn't buy into the Blu-ray development process by accident. Blu-ray drives are likely to be a popular peripheral by next year, and that may spur computer users to upgrade their systems earlier than they had expected.

So there will some stocks worthy of a closer look by our Rule Breaker newsletter service as consumers make the migration to a new platform. It's these bittersweet times of upheavals when folks are excited about the upgrade enhancements yet upset at the cost of keeping up with the times where money is just waiting to be made. So is that Blu-ray or Green-ray? Tune in and find out.

And the rest of our series on disruptive technologies:

Longtime Fool contributor Rick Munarriz really doesn't know why Ray is so blue. He owns shares in Disney and Pixar. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.