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Toshiba Goes Active in Format War

Since attempts to negotiate with Sony on a common next-generation optical disc format have not been successful, Toshiba has taken a risky, but effective step if successful: to win over to its side Chinese manufacturers that can fill the world with inexpensive HD-DVD players.

The tactic of attracting Chinese manufacturers is unusual for Japan – companies such as Sony or Panasonic are trying to postpone the moment of transition of their developments into the consumer goods category as much as possible. In this case, Toshiba’s decision is dictated by tough race conditions, in which the stake is billions of dollars, which the winner can count on if its format is chosen as the industry standard for the coming years.

As you remember, China, in turn, is developing its own format for storing high-definition video recordings. Although it is not expected to appear until 2021, it is interesting that the Chinese have chosen HD-DVD as the basis for their development.

By winning over Chinese manufacturers, Toshiba can be confident that affordable HD-DVD players hit store shelves months before Sony, Panasonic, Samsung and other Blu-ray supporters hit store shelves. Analysts are reminiscent of the DVD situation – in the US, the market went mainstream when low-cost Chinese-made models entered major retailers such as Wal-Mart.

What is Toshiba at risk? Its own turntables will bring less profit as they will have to compete with cheaper models from China. It will take longer to recoup development costs.

Sony and Blu-ray Group Selectively Approach Technology Licensing. They expect to skim the cream off the new market themselves, so they try, on the contrary, to prevent other companies from producing the corresponding products ahead of time.

Recall that Sony has already lost in a similar situation once. By offering a technically superior video format, Betamax, it nevertheless ceded the mass market to the competing VHS standard.

Source: Herald Tribune

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