Most of your questions are pretty basic. I've been working in various areas of home video for over 10 years
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1) What is the motivation motivation HD-DVD/Blu-Ray development?
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Money. Plain and simple.
Better copy protection than DVD's wide open CSS, and selling people the same movies again
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2) Why a blue laser and not a shorter wavelength laser?
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Because you have to consider the wear and tear on the medium, while still maintaining glitch free playback. Smudges, fingerprints etc scatter the laser, and the blue laser allows small enough pits for large data storage, while still being "large" enough to handle those issues.
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3) What are some design challenges during the HD-DVD/Blu-Ray design process?
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Pretty much above, getting good error correction software and getting the manufacturing yields up. Anything else they're not going to talk about publically, at least not right now.
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4) Why does blu-ray use a thinner disc compared to other DVDs and HD-DVD? What is the advantage and disadvantage of a thinner disc?
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It's not "thinner", per say, the data layer is closer to the surface. So far as I know it still retains the standard CD specs. The closer the data is to the laser, the smaller the pits you can use because there are less read errors.
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5) What the technical differences between HD-DVD and Blu-Ray Disc?
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As far as the physical medium goes, different data depth levels, HD has larger pit size.
The other facts again fall under the trade secret categories