The difference is that with HDMI you now have to go through another device to get the audio signal , you don't get to choose. While HDMI works for setups of player > reciever , it doesn't work for people that want to do HDMI > TV > headphones unless your tv has headphone or audio out.
Uh....Isn't this how it worked in the past? You couldn't hook up, say, a Nintendo 64 to an analog television and to headphones, unless 1) your TV had a headphone output or 2) you passed the audio signal through some sort of audio component with headphone output.
This wasn't a problem before because you could route audio however you liked.
As far as I know, there aren't any source components out there with ONLY HDMI as an output. E.g. my Xbox 360 is capable of outputting HDMI and the old-style component/optical (or even analog audio) combo at the same time. This is how I have it hooked up, actually -- HDMI to my TV, and optical to my receiver (because my receiver doesn't have HDMI). The "you can do whatever you want with the audio signal" thing is still just as valid today as it used to be pre-HDMI, because those audio signals (digital and analog) are still present and still being output by the same source devices. Gaming consoles? Analog outs. Blu-Ray players? Analog outs. Digital Satellite and Cable? Analog outs. Anybody who wants to can hook up whatever audio stuff they have, to whatever source devices they have, and completely ignore HDMI (or, for that matter, digital audio altogether) if they want to. A receiver just makes your world a whole lot easier because you can use it as a signal switcher and never have to change inputs on your TV. If you are fine with switching inputs on your TV all the time, as well as changing inputs on your receiver, you are still free to go nuts running wires all over the place and hooking things up in whatever order you want to.
Look on HTPC forums at the number of complaints from people trying to go from PC > home theater and trying to get audio to work correctly. They either have to buy a video card that supports it or do without audio on the tv. Most TV will not let you provide audio any other way on HDMI but through HDMI cable.
So they should know the limitations of the TV's they buy before they buy one. If they care to use separate analog or digital audio connections from their PC to their TV, then then can buy a TV with component or DVI+optical inputs. If they already have a TV that doesn't do this, then they can buy a new video card that outputs audio over HDMI.
And you have to admit that a huge portion of the insanity that is building a HD-capable HTPC is due to the ridiculous HDCP requirements of the movie companies. Never to date has the signal been so thoroughly controlled, from disc to display. For standalone components like BRD players, game consoles, receivers, and TVs, there's a very good degree of interoperability (although I have heard of a few exceptional cases) but when you're building a HTPC from a BRD drive, a video card, a motherboard, etc. where the signal could conceivably be "jacked" at one point, the MPAA has created a lot of hoops to jump through. That BS would have happened regardless of whether the physical standard for the connector was HDMI or this new Cat5 thing.
Not bad engineering at all. The engineers told them that it was a problem but were dismissed . Engineers wanted thumbscrews to support the cables like DVI but marketing wanted it like USB.
I am not talking about the original engineering team that designed HDMI. I mean the people making the flimsy electronics with the likely-to-break connectors in them. There have got to be ways to reinforce the connectors on the inside so they don't break, or just make them more beefy in general so they don't flex.
Of course manufacturers love it because they get to sell all new receivers.
Uh, yeah, that's the way it works when a new video signal standard comes out. You've got to buy new source devices that output the signal, new TV's to display the signal, and, if you want to run the signal through a receiver, you've gotta buy a new receiver too. Damn progress!