Toshiba concedes defeat in DVD format war

Japan’s Toshiba conceded defeat on Tuesday to rival Sony in a long-running DVD format war, ending consumer confusion but leaving about one million people with expensive machines doomed to become obsolete.

Toshiba said it will stop selling its HD DVD machines by the end of March, clearing the way for the Blu-ray format developed by Sony and its partners to become the industry standard.

The victory is sweet revenge for Sony, which learned its lessons well from a defeat in a similar format war that erupted in the late 1970s between the VHS and Betamax types of video cassettes.

Analysts say the end of the format war will reduce consumer confusion and should encourage Hollywood studios to bring out more movies on Blu-ray.

“Blu-ray is the winner, so now the studios will start coming out with more releases. It’s good news for consumers,” said Claudio Checchia, a research manager at technology information firm IDC in Singapore.

But that is little solace for those Toshiba customers who are now left with what Checchia described as “a very expensive device to play standard DVDs”.

Toshiba has sold 700 000 HD DVD players globally, while 300 000 more HD DVD drives have been sold for Microsoft’s next-generation Xbox 360 video-game console. Many more have been put into laptop computers.

Blu-ray and HD DVD both offer cinematic-quality images and multimedia features, but the movie studios were eager to see the emergence of just one standard, while many consumers had been reluctant to buy a machine that might become nearly useless.

HD DVD’s fate was sealed by a series of heavy setbacks, with Hollywood titan Warner Brothers and United States retail giant Wal-Mart both throwing their weight behind Blu-ray.

Toshiba president Atsutoshi Nishida said that Warner Brothers’ decision to abandon HD DVD “was a real bolt out of the blue, and the impact was very big”.

“We made a quick decision, judging that there is no way of winning the competition,” he told reporters.
“It was an agonising decision for me, but I thought if we kept running this business it would have grave ramifications for the management of our company.”

The Blu-ray victory is a boost for Sony, which did its utmost to try to ensure that the technology did not become irrelevant like Betamax.

“If you look at it from a purely technical side, HD DVD was perhaps slightly superior compared with Blu-ray,” said Checchia.

The key to Sony’s success this time around was that its chief executive, Howard Stringer, a former head of the company’s North America division, drew on his Hollywood contacts to drum up support for Blu-ray.

“At the time of the Betamax they basically decided to go on their own. This time they went out and they built support from both the industry and from the studios,” said Checchia.

Blu-ray’s success was also helped by its inclusion in Sony’s PlayStation 3 video-game machine.

As well as ending sales of standalone high-definition machines, Toshiba said it will stop volume production of HD DVD disk drives for computers. It will also assess whether to keep making notebook PCs with integrated HD DVD drives.

But it will continue to provide after-sales support for people who have already bought its next-generation DVD players and recorders.

Toshiba said it will now focus on more profitable business areas, such as NAND flash memory chips that are essential for portable music players and other consumer electronics.

The group announced on Tuesday that it will build two new semiconductor plants, one of which it will jointly operate with its US partner SanDisk.

“The size of the investment in those plants has yet to be fixed, but the amount is likely to surpass 1,7-trillion yen [$15,7-billion],” Nishida said.

The name Blu-ray Disc is derived from the blue-violet laser used to read and write this type of disc, according to Wikipedia. Because of its shorter wavelength (405 nanometer), substantially more data can be stored on a Blu-ray Disc than on the DVD format, which uses a red (650 nanometer) laser. A Blu-ray Disc can store 50 gigabytes, almost six times the capacity of a DVD.—AFP

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