PC for watching HD-DVD

Microsoft is also in the HD business after Sony, Toshiba, and other electronics giants.

http://www.microsoft.com/windows/windowsmedia/content_provider/film/T2DVD.aspx

They say I need at least 3.0GHz processor and ATI 9800 Pro.

Download the following clips to experience high definition Windows Media Video. To deliver ultra-high quality, these clips were encoded 24 fps, and at the resolution noted of either 1280 x 720 (720p) or 1920 x 1080 (1080p).
Although other system configurations may be able to playback this content, for an optimal experience we recommend systems of at least a 2.53 GHz Intel or AMD Athlon XP 2200+ or higher processor for 720p and 3.0GHz or greater processor for 1080p. For either scenario, an AGP4x based NVIDIA or ATI video adapter card with at least 32 MB of RAM and the most recent OEM driver updates is recommended.

The higher the data rate (in Mbps), the higher the resource requirement. For optimal playback of 1080p content, an AGP8x 128MB video card such as the ATI Radeon 9800 Pro series is required.

And there are Blu-ray, too.