Blu-Ray vs. HD-DVD (2006) - Page 23

Toshiba calls for HD DVD Blu-ray truce
Posted Jun 27th 2006 6:54AM by Ryan Block
Filed under: Home Entertainment

We don't even really know how to approach this one, but we all well remember the talks that went down between Toshiba and Sony (et. al.) before Blu-ray and HD DVD hit the market; they were going to truce, they were going to unify, it was going to be more like DVD, less like Betamax and VHS. And, of course, we all know how that went. And no matter how many times we think talks might still be in the cards, they get shut down for one reason or another, bitter rivals to the end. Except when one of the most powerful men in the Japanese electronics business, Toshiba President Atsutoshi Nishida, tells investors "We have not given up on a unified format. We would like to seek ways for unifying the standards if opportunities arise." Oh sure, we could take that at face value and all, but it sure does go a long way to assuage stockholders' fears that a format war might yet render Toshiba's technically inferior HD DVD format obsolete and useless, telling them that a unified high definition video format might still be in the cards. Call us pessimists, but we'd love nothing more than for these guys to prove us wrong.

By Stan Beer
Thursday, 29 June 2006
There is something to be said for sticking to your guns if you have a superior product. At least that's what Sony demonstrably believes judging by its recent policies on pricing. PlayStation 3 will be by far the most expensive gaming platform but Sony makes no apology because it believes, despite assertions to the contrary, that it can wipe the floor with Xbox 360 and Nintendo Wii. Likewise, Sony is convinced that its Blu-ray technology is set to win the high definition video stakes and there are signs that the HD DVD backers know it.

When Sony lost the last video war a few decades back to an inferior technology it must have really hurt. This time round, however, history does not look set to repeat itself. The first Blu-ray players have come out on the market from Samsung, three months behind the first Toshiba HD DVD players and at double the price. However, whereas Samsung is almost certainly selling its players at a profit, technology analysts assert that Toshiba must be selling its units at about US$200 below cost.

The upshot of this is that the early Blu-ray players, though expensive, are correctly priced, whereas the early HD DVD players are irrationally and unsustainably priced. Sony also has an ace up its sleeve with PS 3, which will include a Blu-ray player on board. It is no secret that Sony intends to ship millions of its PS3 players at a staggering loss of up to US$400 per unit. However, Sony, unlike Toshiba, is also in the content business and can recoup those losses through the sale of games.

For Sony, PS 3 is a flagship platform and the stakes are high. It has put everything into the integration of Blu-ray with PS 3 so it cannot afford to lose the high definition video war, which is why it probably won't. Toshiba, by contrast, appears to be dipping its toe in the water with HD DVD. It has squandered the opportunity it had by being first to market with the technology and there are indications that HD DVD players that only enable 30 GB of storage per disk are not demonstrably cheaper to manufacture than Blu-ray players which store 50 GB.

In addition, Sony has a well planned strategy of getting Blu-ray into the hands of millions of early adopter consumers at a reasonable price through the sale of PS 3 units. Toshiba has no discernable equivalent strategy.

It is in the face of these undeniable facts, that we hear noises coming from Toshiba's president Atsutoshi Nichida calling for unification of the two competing formats. The rhetoric is most likely political speak because there is nothing in it for Sony to accept such a compromise. Sony has burned all its bridges and committed itself to the hilt to Blu-ray. Toshiba on the other hand has just revealed that it is only luke warm on the prospect of fighting a protracted and expensive battle with a committed and formidable competitor. Thus, we may even see at sometime in the future, when the economy of scales is in place, the release of Toshiba Blu-ray players.

Plextor has launched its first Blu-ray drive - the PX-B900A. The internal (ATAPI) re-writer drive is capable of writing and re-writing Blu-ray discs at 2x (BD-R and BD-RE) up to a maximum capacity of 25GB for single layer and 50GB for dual-layer.

Rudy De Meirsman, Sales & Marketing Manager of Plextor Europe, says: "We are delighted to be launching our first Blu-ray device. Plextor has a long history in providing premium, high reliability optical drives and the new PX-B900A is no exception. This launch marks the start of a family of Plextor drives utilising Blu-ray technology."

The PX-B900A not only uses the latest Blu-ray technology, but is also a dual-layer DVD drive that combines multiple formats - DVD+/-R/RW and RAM - into one. It can accept both 12cm and 8cm discs (in the horizontal position) and has a large 8MB buffer to ensure there is no data interruption. Write speeds: 2x BD-R/BD-RE, 8x DVD+R/-R/+RW, 6x DVD-RW, 4x DVD+R/-R DL, 5x DVD-RAM, 24x CD-R and 16x CD-RW.

The Plextor PX-B900A has been developed to strict environmental and recycling standards - to meet EU RoHS (Restriction of Hazardous Substances) and WEEE (Waste Electrical and Electronic Equipment) directives.

The Plextor PX-B900A will be available from September/October 2006 at Plextor?s network of dealers. It is covered by Plextor?s Fast Warranty Service (2-year warranty in the EU, Norway and Switzerland (Collect & Return); other countries 1-year carry-in).

Toshiba's Questionable Commitment to HD-DVD
Toshiba is selling the HD-A1 at unsustainable loss, and company President Nishida is calling for format unification. Is Toshiba really in to win?
by Gerry Block
June 28, 2006 - The next-gen DVD format war has officially begun, but instead of artillery and destruction, the opening volley looks a lot like a white flag. Toshiba President Atsutoshi Nishida made headlines recently on the HD-DVD / Blu-ray conflict while speaking at an annual shareholder's meeting. The helmsman told his audience "We have not given up on a unified format. We would like to seek ways for unifying the standards if the opportunities arise." His statement surprised many, as it comes at a critical period for Toshiba's own HD-DVD format, which launched on April 18th , and has since met sell-out demand for the limited supply of 7,500 Toshiba HD-A1 units that were made available.

The first player and movies for the Sony-backed Blu-ray format launched just weeks ago, finally putting the formats head-to-head in the open marketplace. While this would traditionally mean that full-scale war has begun, few skirmishes are occurring at retail or in advertising. Conciliatory remarks regarding a truce between the formats by the man in charge of Toshiba are also surprising at this juncture and seem to beg for analysis.

Those familiar with the videogame industry have grown up in a culture of launch blitzkriegsmarketing frenzies, massive press coverage, and fiery rhetoric from company executives. The term "soft-launch" isn't in the videogaming vernacular, and has seen little use in general consumer electronics in the years since Steve Jobs set an industry example with his style of dramatic hardware announcements. Nevertheless, HD-DVD and Blu-ray have each soft-launched in textbook style, appearing with little fanfair at retail and in limited supply.

From Sony's perspective, Blu-ray and the PlayStation 3 will launch hand in hand this coming November, and as such the company is saving their big guns for the holiday season. Toshiba, on the other hand, has no such tie-in for HD-DVD, aside from the possibility of an add-on drive for the Xbox 360. Before the format's launch in April, much was made of the potential for Toshiba to leverage HD-DVD's head start over Blu-ray, yet the company chose to make little of the opportunity.

The wisdom of Toshiba's decision has been widely debated. Viable explanations for the soft-launch range from lack of available media and limited production capacity to debatable early consumer demand. While each factor likely played a roll in how Toshiba formulated their game plan, revelations on the production costs of Toshiba's HD-A1 and Atsutoshi Nichida's recent comments call into question whether Toshiba is really out to win the war at all.

Technology analysts at iSuppli recently announced that, according to their generally respected calculations, the Toshiba HD-A1 HD-DVD player costs around $700 to deliver to retail. The unit is sold for $499, which means that Toshiba is taking $200 of loss on each HD-A1 shipped. While the market model of selling hardware at a loss in order to make profits from media sales has long been established in the videogame industry, it is practically unheard of in the general consumer electronics space. While Toshiba does receive a licensing fee on all HD-DVD media, thanks to the fact that it is one of the format's founders, such royalties are unlikely to be great enough to support continuing volume sales of the HD-A1.

While efficiencies of scale could eventually drive the manufacturing costs down, Toshiba would have to commit to the format in a serious way and invest heavily in manufacturing infrastructure, a decision that the company's upper management is hesitating to make. In light of a currently unsustainable manufacturing and distribution model and a stated willingness to devise a new compromise standard, Toshiba's long-term commitment to the HD-DVD format appears questionable.

Format wars have never been good for consumers or the companies that become embroiled, and the battle over the next-gen DVD format is an unfortunate consequence of the breakdown of unification talks that occurred in 2005. Sony and Toshiba came to loggerheads in the discussions and each left the meetings promising to drive the other out of the market. Taking this history and Toshiba's hesitation to fully commit to HD-DVD into consideration, the HD-DVD vs Blu-ray conflict appears more like a game of corporate bluff-calling than a real war. Sony has committed to Blu-ray in a huge way, staking both the PlayStation 3 and much of their related consumer electronics arms on the viability of the format. Toshiba, on the other hand, is all but detaching themselves from HD-DVD by taking no advantage of their first-to-market position, releasing hardware at unsustainable loss, and now referencing a willingness to give up on the format altogether in favor of a unified standard.

In the end, there will be a victor and a loser in this format war. Sony believes that it will be able win the competition for installation-base on the back of demand for the PS3. In terms of corporate commitment, Sony has pledged to ship 6 million PlayStation3s, at massive loss per console, before the end of the financial year. If the videogame console war goes Sony's way, the hardware losses will be recovered via game sales. Toshiba, on the other hand, does not have the ability to recoup money spent selling hardware below cost, and convincing its own management and hardware partners that they can actually win the format battle against Sony's committed onslaught will likely prove more and more difficult as time goes by.

With so much already invested in the format, Sony is unlikely to ever accept a unified standard if the PS3 is even a moderate success. Toshiba must decide now to either recommit itself and partners to HD-DVD and work hard for an installation base that will appear comparable to the PS3's first month sell through, or bail out of the conflict altogether. Sony has called Toshiba's bluff in the format war, and Toshiba has responded with a 7,500 unit launch at the expense of $1.5 million in losses and pleas for unification. Perhaps it's not the launch that was soft, but the Toshiba executives in charge.