I lead the acquisition of Pacific Microsonic into Microsoft/my team . The interest we had was not in HDCD. That is true. Instead, we were interested in speaker correction technology Keith and Pflash had developed. They were able to dial out the distortions in cheap computer speakers. HDCD was dying due to introduction of DVD-A and SACD. You could have real high resolution music instead of trying to get there part of the way with 20 bits versus 16 of CD using HDCD. If we had not stepped in, they would have closed their doors shortly.My recollection may be in error, but I recall reading that Microsoft essentially killed HDCD as a consumer audio format after they purchased Pacific Microsonics. The rumor was that MS was only interested in the IP related to disguising control codes and other information in the media channel as pseudo-noise. I was under the impression that HDCD was steadily growing until MS stepped in and erased it from existence. The disguising of information as pseudo-noise aspect of HDCD suggests to me what MQA may be doing to hide it's high-rez content. The patents behind HDCD have probably expired some time ago, so, maybe, MQA is utilizing them, but that's merely speculation.
Note that we did not want to kill HDCD. The problem was that it was a super messy business. The HDCD ADC and encoder was this esoteric box (Model 2 at the time) that was a nightmare to manufacture. We looked hard and found a manufacturer to pick it up and from what I recall, we gave them the business for free and on top of that gave them something like $450,000 in parts to keep it going. On the decoder side, they had embed it in a custom made DSP by motorola that Motorola proceeded to instantly end of life when we acquired the company. We made a lifetime buy of again, something like $450,000 to make sure we did not strand the CD player OEMs. We then set up a support group to support companies interested in continuing to use it. All at great expense to us.
I tried to get HDCD also into our playback chain but my team would not go for full implementation due to requiring a new pipeline in the windows media player. I got them to at least detect and light up HDCD but that was it.
So not a great story but as I said, it was technology whose time had come and gone. They knew it by branching into speaker correction and we realized that as the value.