Wall Street Journal: "Toshiba Regroups After Losing DVD War"

[JTK]

This piece tells you exactly why Blu-Ray won and HD-DVD lost with facts, figures, and zero FUD. It's the best summary of all of it that I've seen yet.


http://online.wsj.com/article/SB1203...ain_whats_news

Toshiba Regroups After Losing DVD War
CEO Announces Plans
To Invest $15.71 Billion
In Flash-Memory Push
By YUKARI IWATANI KANE
February 20, 2008; Page B3

TOKYO -- Toshiba Corp. pulled out of the high-definition DVD business, blaming the loss of support from a key movie studio and handing victory in a format war to Sony Corp.'s Blu-ray technology.

Toshiba, a Japanese conglomerate that makes products from chips to nuclear reactors, said it would cease production of its HD DVD players and recorders immediately and end the business by the end of March.

"It was a heartbreaking decision," Toshiba Chief Executive Atsutoshi Nishida told a news conference. "But we considered the impact of continuing the business on our operations, the next-generation DVD market and consumers."

Mr. Nishida said it was important to take action quickly. He simultaneously announced plans to strengthen Toshiba's flash-memory business by investing more than 1.7 trillion yen ($15.71 billion) along with its U.S. partner SanDisk Corp. to construct two plants in Japan. Flash memory is a kind of chip typically used in digital cameras and music players because it is light and small.

Computer makers are slowly starting to replace hard-disk drives with flash memory. Use of flash chips slashes boot-up times and makes laptops lighter. The chips are still too expensive to be used widely in computers, but a continuing price decline could increase demand.

The DVD format battle had been fought during the past several years. Sony has led a group backing its Blu-ray technology. Toshiba has promoted its HD DVD format, which it touted as the affordable choice for consumers. Persuading major film studios to issue movies in their formats was crucial.

"Our goal now is to educate the consumer about the advantages of high-definition now that the format war is over," said Howard Stringer, Sony chief executive, in a telephone interview. "A lot of people have obviously been sitting on the fence."

Mr. Nishida said he realized there was no chance of winning the battle after Time Warner Inc.'s Warner Bros. decided last month to side with Blu-ray. Time Warner is a longtime Toshiba partner but saw that Blu-ray software sales were significantly outpacing those of HD DVD. Since then, U.S. retailers from Best Buy Co. to Wal-Mart Stores Inc. have backed Blu-ray in the hope of putting an end to the battle, which has deterred many consumers from buying high-definition DVD players.

Toshiba's quick surrender is a sign of how grim the situation had become for the HD DVD side. The decision was unusually swift for a Japanese company, especially over an issue where corporate pride is at stake, and analysts had assumed Toshiba would let the business fade out quietly.
[Silver lining charts]

Investors welcomed Toshiba's pullout because the company no longer will spend money on a losing technology and it can focus on areas that are potentially more profitable. Since the news broke over the weekend, Toshiba's share price has risen 5% to 824 yen on the Tokyo Stock Exchange.

Toshiba had hoped to increase its relatively small presence in the consumer-electronics industry, making it a pillar of growth in addition to its semiconductor and nuclear-reactor businesses.

Toshiba said about one million HD DVD players have been sold globally since they went on sale in March 2006, including players that can be attached to Microsoft Corp.'s Xbox 360 videogame console. That was far short of Blu-ray's 6.3 million players, according to the Blu-ray Disc Association. That figure includes sales of Sony's PlayStation 3 videogame console, which has a Blu-ray player.

Sony's Mr. Stringer said PlayStation 3 users played a big role in the format battle. "The early adopters were obviously the games enthusiasts, but before Christmas, we began to move past the early adopters into the mainstream audience...and that clearly drove content sales exponentially forward."

[Freebster2007]

It's Safe to say we wont have Toshiba Blu Ray Players on the Market
Ever

[dobyblue]

I'd bet Toshiba release one before Christmas....probably a rebadged BD-P1500 or BD-UP5500

[stockstar1138]

wtf sony? where are you pulling this 6.3 million number out of?

[Blu-ray Fanatic]

A little temptation will make Toshiba produce their own blu-ray products

[JTK]

Originally Posted by Freebster2007

It's Safe to say we wont have Toshiba Blu Ray Players on the Market
Ever

Who'd want them or care when they can choose from all of the leading and superior CE companies?

[Sonny]

Why have a Toshi BD player when 'all' the good CE's are making um

[davidPS3]

Great Article, thanks for passing it on.

[JTK]

Originally Posted by stockstar1138

wtf sony? where are you pulling this 6.3 million number out of?

Click on the link and look at the charts. These figures include game systems, add ons, standalones, the works.

That number does seem a bit high, but I have a hard time believing the WSJ would be sloppy to run with suspect figures.

[Blu Titan]

Thanks for posting. Very nice article, expecially from a reputable publication such as the WSJ.

[Sylin]

Yes, because "sorry we lost, but we're investing $15 billion into flash memory" is a good way to get the analysts on the Nikkei and Wall Street to go, "Oh, OK. Bravo! Let's not downgrade their stock to 'sell' just yet."

[stockstar1138]

Originally Posted by JTK

Click on the link and look at the charts. These figures include game systems, add ons, standalones, the works.

That number does seem a bit high, but I have a hard time believing the WSJ would be sloppy to run with suspect figures.

so the 6.3 is just in America?

cause they were using global Toshiba figures?

cause ps3 has sold 10.5 million worldwide so far.

[tron3]

I don't know anyone with Toshiba anything in their house. Though my old job used Toshiba laser printers than ran like champs. That was years ago.

Toshiba is only hurting emotionally now. Their stock is up 5% since the announcement, and they are saving 350 - to 460 million dollars this year for dropping HD DVD. Even though they lost, they won.

The only people who lost are 1,000,000 HD DVD consumers. M'eh, casualties of war. Blow it off... only a few measly million dollars of consumer money went toward movies and inferior products. Who cares, life goes on. Que sera sera. "What will be, will be." All water under the bridge, right?








Wrong.

[sj001]

Thanks for the link, very informative.

I can't see myself ever buying a Toshiba BD player. But I do think they will build one later in the year, there is no way they would stay out of the next gen business which is going to be very lucrative.

[Bobby Henderson]

I think Toshiba will eventually make some Blu-ray Disc players. It may be a couple of years before that happens, but it will eventually happen.

After all, Sony eventually started selling VHS tape decks after the Beta/VHS format battle.

Regarding other Toshiba products, lots of people have Toshiba branded products running in their homes or offices. Some may not realize it. Toshiba is a leading manufacturer of computer hard disc drives. They make a lot of flash memory too. Their notebook computers have received a pretty good amount of acclaim (although for Windows-based notebooks I usually recommend Dell -it's either that or get a MacBook Pro).

[stockstar1138]

Originally Posted by tron3

I don't know anyone with Toshiba anything in their house. Though my old job used Toshiba laser printers than ran like champs. That was years ago.

Toshiba is only hurting emotionally now. Their stock is up 5% since the announcement, and they are saving 350 - to 460 million dollars this year for dropping HD DVD. Even though they lost, they won.

The only people who lost are 1,000,000 HD DVD consumers. M'eh, casualties of war. Blow it off... only a few measly million dollars of consumer money went toward movies and inferior products. Who cares, life goes on. Que sera sera. "What will be, will be." All water under the bridge, right?








Wrong.

not even 1,000,000 lost. How many of those people are people who bought more than 1 player, how many never intended HD DVD use, just got a good deal on a good upscaler, and how many bought it knowing it was going to die, but for $99 thought it was a good way to get content now. I really think the people who got burned were probably about 500,000, which ireally isn't a lot.

[radagast]

Originally Posted by dobyblue

I'd bet Toshiba release one before Christmas....probably a rebadged BD-P1500 or BD-UP5500

Nope. Toshiba and Microsoft are concentrating on HD downloads.
They are still trying to foist an inferior technology on the public.

[radagast]

Originally Posted by tron3

The only people who lost are 1,000,000 HD DVD consumers. M'eh, casualties of war. Blow it off... only a few measly million dollars of consumer money went toward movies and inferior products.

At least the money they spent was on cheaply priced players.

[Terjyn]

Originally Posted by stockstar1138

so the 6.3 is just in America?

cause they were using global Toshiba figures?

cause ps3 has sold 10.5 million worldwide so far.

It even says it's a global number in the article.

Something is definitely wrong there. 6.3 million worldwide as of February (implied by the graph right next to it if not explicitely stated) means that the PS3, worldwide sales figures, were only about 5.5 million. Absurd.

[aristotles]

Originally Posted by Terjyn

It even says it's a global number in the article.

Something is definitely wrong there. 6.3 million worldwide as of February (implied by the graph right next to it if not explicitely stated) means that the PS3, worldwide sales figures, were only about 5.5 million. Absurd.

Maybe someone should email the WSJ with correct figures and links to back them up.