TOSHIBA SURRENDERS ………………..

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TOSHIBA SURRENDERS ………………..

 user 2008-02-19 at 11:46:00 am Views: 43
  • #21137

    Toshiba Surrenders in Home Movie War
    TOKYO
    (Feb. 08) – Japan’s Toshiba Corp waved the white flag in the
    high-definition home movie war on Tuesday, giving up on its HD DVD
    format after losing the support of key studios and retailers to the
    Blu-ray technology backed by Sony Corp.Toshiba, which had hoped HD DVD
    would drive growth in its consumer electronics business, said it would
    aim to end its HD DVD business by the end of next month after losing
    the support of key studios and retailers to the Blu-ray technology
    backed by Sony.The decision by the electronics maker ends its battle
    with a consortium led by Sony over who should set the standard for the
    next generation of discs, a fight that confused shoppers and stalled a
    move to the new technology in the $24 billion home DVD market.The
    Blu-ray win means consumers no longer have to choose between rival
    incompatible formats and run the risk of being stuck with a 21st
    century equivalent of Betamax — Sony’s videotape technology that lost
    out to VHS in the 1980s.Toshiba, which had hoped HD DVD would drive
    growth in its consumer electronics business, said it would aim to end
    its HD DVD business by the end of next month.”This was a very difficult
    decision to make … but when we thought about the trouble we would
    cause to consumers and our partners, we decided it was not right for us
    to keep going with such a small presence,” Toshiba Chief Executive
    Atsutoshi Nishida told a news conference.The company said it would
    continue to service existing HD DVD products, and added it expected
    bigger profits over the next year as it will cut spending earmarked to
    promote HD DVD.The tide turned against HD DVD after the defection to
    Blu-ray by Time Warner  Inc’s Warner Bros studio last month.Big U.S.
    retailers soon followed, including Wal-Mart Stores  Inc (WMT .N), Best
    Buy  Co Inc. and online video rental company Netflix Inc., and pundits
    began writing obituaries for HD DVD.

    CUTTING LOSSES
    While
    Toshiba has lost the chance to be the leader in the next generation of
    movie discs, investors welcomed its decision to cut its losses on HD
    DVD early and invest in more promising businesses.Toshiba’s shares
    leapt nearly 6 percent on Monday, although they pulled back 0.6 percent
    on Tuesday compared with a 0.9 percent rise in the benchmark Nikkei
    average.Toshiba twinned the HD DVD exit with an announcement that it
    and partner SanDisk  Corp would spend about 1.7 trillion yen ($15.7
    billion) on two new flash memory plants in a bid to catch up with
    industry leader Samsung Electronics in the fast-growing
    market.Investors are now waiting to see if and how Toshiba will get
    access to Blu-ray technology for its home electronics business.”It’s
    going to have to buy the technology from elsewhere or pay Sony or
    Matsush*ta for the licenses,” said Tetsuro Miyachi, senior portfolio
    manager at Franklin Templeton Investments Japan. “But the company saw
    that this is still better than just continuing on with losses of tens
    of billions of yen each year.”

    CEO Nishida said Toshiba has “absolutely no plans” to make or sell Blu-ray players.
    Toshiba
    has HD DVD agreements with studios including NBC  Universal’s Universal
    Pictures, Viacom  Inc’s (VIAb.N) Paramount Pictures and DreamWorks
    Animation SKG Inc (DWA.N), which will now likely have to switch to
    Blu-ray.Existing Blu-ray supporters included News Corp ‘s (NWSa.N) 20th
    Century Fox, Walt Disney  Co (DIS .N) and Lions Gate Entertainment Corp
    (LGF.N). Sony’s PlayStation 3 game console also plays Blu-ray
    films.Toshiba, which began sales of HD DVD players in March 2006, has
    sold 1 million players and recorders, including sales of drives for
    another supporter, Microsoft  Corp (MSFT .O), for its XBox 360 game
    console.If Toshiba can clear hurdles to design software for Blu-ray, it
    could use a joint venture with Samsung Electronics Co Ltd (005930.KS)
    on optical discs to make Blu-ray players, analysts said.Toshiba could
    also procure Blu-ray products from Sony or Matsush*ta Electric
    Industrial Co (6752.T) and sell them under its own brand, they said.