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They are trying to set it up to be the replacement for DVD.
In the most basic terms, it is really just a high capacity DVD. It has so much capacity that they can fit high definition video on it (1080P instead of 480P on regular DVD). I think they hold about 50 GBs.
If you want one now, the smart choice is to buy a PS3. It has about the same quality as the stand alone players, and it is actually cheaper, and you get a game system to boot.
I am waiting for another year to see what happens, as there is a competitor (called HD-DVD). I suspect Blu-ray will eventually dominate the market, but right now it is about even in total sales. Some companies are also making dual-format players, but they cost a fortune.
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