RSSDialog: After HD DVD, whither Toshiba?
By Scott M. Fulton, III | Published February 22, 2008, 6:50 PM
A multinational, multi-talented, highly diversified technology producer doesn't simply wither away just because it loses one battle -- even a loss as big as HD DVD. But depending on how it chooses to stick around, will Toshiba find itself redeemed? Or liable?
When a minor professional sports league finds it can't compete with the majors, it disbands and goes away. When a television network can't profit from its productions, it ceases operations and follows in the long wake pioneered by the DuMont Network. When a presidential candidate loses, he often fades into the backwoods of history...and fast.
But a format is someone's intellectual property, and as such, it's an investment. Too much is tied up in it, so even when that IP is forced out of the market, you can't just turn it off. It has to wind down. Retailers have to find a way to flush their inventory. Manufacturers have to retool. Components makers have to rethink their strategies. And all the while, the IP licenses they purchase...live on, and even accrue fees.
It's at a time like this when all eyes turn to Toshiba, the champion of HD DVD and, at least in the beginning, the obvious Biggest Loser in the format war with Blu-ray. Earlier this week, I asked technology analyst Carmi Levy to help figure out whether there's any kind of redemption scenario for Toshiba.
SCOTT FULTON, BetaNews: A lot of people forget, when they talk about formats, that formats consist first and foremost of intellectual property. There is a lot of money invested in the intellectual property of HD DVD. Now, I don't know about you, but let's say I find this great new smartphone, and I make a two-year commitment to go with the carrier that can provide me with the smartphone and all the software that's behind it. And three months later, that carrier goes belly-up. I don't know whether I really do have legal recourse, but by [golly], I'm going to check to see whether I do, and I want to see whether I could get my money back on the remaining parts of it.
Now, there are a whole lot of manufacturers here, of not just the consoles but the disc manufacturing factories, the testing organizations. One of these testing laboratories for HD DVD came online this week, of all the bad timing. These people invested tens of millions of dollars in equipment...and there's a lot of money tied up in this. The first thing these guys have got to be thinking is, how do we get it back?
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| AR Communications Senior Vice President Carmi Levy |
And who wins in this? Lawyers, because they get to charge by the hours; whoever wins or loses, it's irrelevant to them. But at the same time, it underscores how this is as much a lesson in business planning as it is in technology planning. Never hitch your cart to one horse, because if that horse fails to finish the race, what do you do then? What is your contingency, to continue to sustain your business model if your original assumptions turn out to have been wrong, and if the market on which you had based those business decisions ceases to develop, or even ceases to exist?
So certainly there are a bunch of HD DVD-related third-party vendors today that are hoping that years ago, when they made the decision to back Toshiba, they had the foresight to have a Plan B ready to execute if Toshiba decided to pull the plug. And if they didn't, then I hate to sound harsh, but they really have no one to blame but themselves. Every company needs a diversification strategy. We follow similar strategies in our personal investments, in how we choose to lead our lives. The same thing needs to apply when a format or a standard comes along. Even Microsoft has recognized that its Windows and Office brands -- standards in their own right -- will not drive the company's growth forever. So as a result, they're actively investing in other platforms in other areas to allow the company to generate revenue, where previously it did not generate revenue.
Even Blu-ray today has a window of opportunity of maybe five years, before the Internet begins to eclipse it. It is by no means a permanent format, and it is by no means an absolute victory because Sony has to already be invested in follow-on technologies, follow-on platforms, and follow-on standards so that it can continue to maintain its revenue streams long after Blu-ray is consigned to the dust heap.
SCOTT FULTON: We started this discussion where you said, obviously, Toshiba's the loser here. But what if there's a silver lining behind this, and my thinking goes like this: First of all, they don't have to invest a lot in the HD DVD Promotional Group any more; they can turn their attention to a partnership with SanDisk on a new type of flash memory technology, a new fabrication facility, and other things that they're good at.
But the other thing is this: Sony is probably going to be the last company in the world to produce a player that is capable of playing an HD DVD disc. But what if Toshiba, having lost -- in all graciousness -- goes ahead and makes a hybrid. Think of it this way: There's this abundance of systems-on-a-chip that are already out there that already are capable of playing both formats. So why not -- in deference to all those people who are having to kick out their first-generation profile Blu-ray players anyway, and the other group who's thinking they shouldn't have invested $100 on that cut-rate HD DVD from Wal-Mart -- present them with a hybrid that [also] plays all the HD DVD discs there will ever be (they'll stop cutting them in April)? Why wouldn't that be a gracious move that ends up benefitting Toshiba in the long run?
"Certainly there's lessons that Toshiba needs to [take in]: You lost. Suck it up, figure a way out of it, recognize the silver lining in the loss, and move on." Carmi Levy, Senior Vice President, AR Communications |
For example, if you can buy a Blu-ray player for $400 today, if [Toshiba] could introduce [a hybrid] into the $400 range, then absolutely, it would be a no-brainer.
SCOTT FULTON: I don't see why they couldn't. Let's face it, a lot of the systems-on-a-chip are actually capable of playing both formats; they just don't. And then there's the slight physical differentiation that you'd have to implement in order to make the blue laser track the same way, but it runs at the same frequency for both formats. You'd probably have to invest maybe $50 per unit in retooling expenses, my guess. And if you've done that...You've lost anyway. So why increase your prices? Market this hybrid at $400. Why not $300. Capture what's left of the market and run with it.
CARMI LEVY: Absolutely. And I think the market's looking to Toshiba to see how fast they can switch their production strategy so that they can cash in on the market move toward Blu-ray. Obviously they don't want to take too crushing blows; they've already taken one. They've lost the war, but now here's an opportunity for them to capitalize on that, and to at least start generating revenue, whereas previously they didn't really have any.
Next: To the loser go the spoils?
I suppose the people more concerned with loosing face, by loosing Blu, didn't give thought to the up-converting players that sort-of snuck-up on them. I've got two up-converting players (actually one is a player/recorder) and I'm very pleased.
It pretty much burns me up when I read or hear about all of those ignorant prospective HD consumers being pulled into, or should I say forced into a format by propaganda that in reality:
1. costs more simply because of manufacturing costs. Not because the movies or content is any better, which it's not. In my mind, the Blu technology itself is not necessarily any better either. Each disc can hold more data/content compared to HD-DVD, but that has no baring what-so-ever in regards to the actual movie on the disc. The additional space will only come into play for PC users when they burn their own discs.
2. for all who bought a PS3 for the gaming with built-in Blu player - not only will you not be able to play games, but you won't be able to watch your movies either if your PS3 goes down, unless you get an immediate exchange for a new one, 8... 9... 10... months down the road.
3. There's more I could get into, but I better stop at this point.
As far as Toshiba's product quality - one of my up-converting DVD players and my 42" LCD T.V. is from Toshiba, and the quality is absolutely top-notch, nothing less than Sony's.
I'd recommend to anybody to go with an up-converting DVD player, whatever the brand. Spread the word.
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|Toshina internally started to replace HDDVD drives with Blue Ray almost a month ago, in their "new generation" of products.
Looks like they read the writing on the wall.
The comment made to me was, "HDVD not doing so well" When we noticed the BlueRay drive...
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|I have an HDTV and a DVD player. That makes me say I have a HD DVD player because my tv is HD right? THATS why toshiba lost mostly. Idiot red neck consumers trying to buy that new flashy disc thinking its blue. As well as a poor name for new technology. For example how many people have a SVHS player????
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|Umm...ok...
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|I have an HDTV and a DVD player. That makes me say I have a HD DVD player because my tv is HD right? THATS why toshiba lost mostly. Idiot red neck consumers trying to buy that new flashy disc thinking its blue. As well as a poor name for new technology. For example how many people have a SVHS player????
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|Ok, here is an interesting idea for you all to chew on and digest. Now that HD DVD is gone, they are saying that the next "Format War" is between Blu-ray and Up-converting standard DVD players.
Will people that were waiting on the sidelines for the Format War to end now rush out and buy $399+ Blu-ray players or will they by $65 up-converting standard DVD players instead and just be content with those?
It is interesting to note here that when you compare sales of standard up-converting DVD players to sales of Blu-ray players, upconverting DVD players lead by a ratio of about 99% to 1%.
I don't know if anyone noticed or not but as HD DVD and Blu-ray were drawing all the attention in the headlines, manufacturers were quietly dropping the prices on upconverting DVD players substantially. Now a basic upconverting DVD player can be had for around $65 (regular every day price, not on sale). A very nice one can be had for $99.
Now that HD DVD is gone, are we going to see standard DVD players steadily increase the quality and capability of their up-converting technology so as to pose as a more appealing alternative to consumers than dropping 400 bills on a new Blu-ray player?
Hmmmm....it does set the mind to wondering now doesn't it? Now consumers are faced with the choice of deciding if going with $399+ Blu-ray is really worth the $300+ differential to step up to native 1080p instead of up-converted 1080p?
This could get interesting.
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|Or $99 for an up-converter that also plays HD-DVD ?
The market is not ready to decide, and so the market is trying to make up their minds for them. sony manage to win a market with vapourware features, matched by the market.
http://www.cclonline.com...er_id=0&tid=dvd0101
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|Internet eclipsing Blu-Ray in a 5-year time it's a pretty naive, maybe Microsoft-driven(?) comment, really.
People don't want to waste their hard earned money on low quality, high compressed, DRM-protected self-destruct movies and products in general and that won't change in the future.
Also, as much as bandwidth goes, UHDV 32Megapixel resolution is the next format under development and scheduled to replace HDTV. By 2012-2015 it's expected to have started selling in the consumer market, with H.265 codec and holographic discs needed to store and sell the new very high bitrate content.
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|"People don't want to waste their hard earned money on low quality, high compressed, DRM-protected self-destruct movies and products in general and that won't change in the future."
LOL ... almost spat my dinner out reading that. Substitute movies with MP3(itunes)and I think you have an answer.
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|iTunes.
Pretty much kills his argument completely.
Why don't people think before posting?
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|A real homer moment, cant believe anyone could even think it never mind type it and hit the return key.
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|Toshiba should start buying movie companies, pumping very popular but non-oscar films and create a fanbase, and win a format wars 20 years later... Meanwhile, create countless of formats to be used by themselves and fail, then maybe succeed once in a long while.
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|Toshiba always seemed to me like a sub-par Sony. A little cheaper than what Sony offers, and not as good quality.
Then again they never put spyware on media, so they will always be better than Sony to me. In fact: every company that doesn't put spyware on their media is better in my eye.
Did I mention I f*(king hate Sony with a passion?
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|"not as good quality"??? you call exploding batteries good quality???
"Then again they never put spyware on media, so they will always be better than Sony to me. In fact: every company that doesn't put spyware on their media is better in my eye."
Second and third paragraphs though, I agree with you 100%
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|"Toshiba always seemed to me like a sub-par Sony."
That, I think, is debatable though too. I guess it depends on what type of product your talking about.
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|Has anyone seen the news about Sony selling the ps3 chip plants to Toshiba for 835M. I know they had a part in it all along but what a way to make a comeback after HD-DVD. What I would like to know is how long was this in the works. And if it help in Toshiba getting out of the HD-DVD market.
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|That was old news, and I believe completely separate and unrelated.
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|Trust me. There will be far more lawsuits over the fact that the Blu-ray camp knowingly and intentionally misled its customers into buying a non-upgradeable device by choosing to withold pertinent and material information that would have substantially factored into their buying decision. That is the kind of things customers sue companies over in class-action law suits.
Toshiba didn't mislead anyone about anything. The Blu-ray camp mislead everyone. Big difference there.
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|Nah, we won't trust you, especially as you demonstrated rabid fanboyism in your "opinion".
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|What you call "rabid fanboyism" the rest of the world calls morals, ethics and a deeply rooted sence of social justice...oh, and a strong grasp of the concepts of right and wrong thrown in for good measure.
What companies do, and how they choose to do it, does matter and they do need to be held accountable for those things when they cross the line into harming the public with deceptive and misleading tactics.
Yes, contrary to public belief...right and wrong DO still matter...even when you are a large, powerful, immoral multi-national company with billions of dollars in the bank.
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|Fanboy!
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|Mind if I ask what's wrong with fanboyism?
And miketechno is right too.
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|Ok...well, if having a strong sense of morals, ethical conviction and corporate social responsibility makes me a "Fanboy" well then....
FANBOY IT IS!!!
Oh, and by the way, there are also then a couple hundred million other consumers out there that would fit that same description you realize.
Hmmm....perhaps that would make us all a "FanArmy"?
Give me a break...please.
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|spin news...
same thing for Sony and betamax...
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|The only way thos site can generate enough ad clicks is by repeatedly putting up stories about HD-DVD and Blu Ray.
Even after HD-DVD is oficially dead, they still post stories about it hoping to get a lot of responses.
None of the other stories get anywhere near the comments.
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|If that's the case, then I suppose I should be grateful to those who choose not to use Firefox + Adblock. :)
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|Dual format players WERE HD DVDs main hope of longetivity since the Sony owned studios would never back HD DVD. It's been proven they can't be made cheap. It's time to move on and leave this discussion for the history books.
Sony can't keep prices up, they know it'll slow adoption. Prices will fall, Chinese companies will produce players in the next year or so, and Blu will be the format, like Sony or not (which I don't).
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|"It's time to move on and leave this discussion for the history books"
Amen to that... Enough with the botching and moaning and fanboying... Had enough of that for the past +1 week...
Let's move on betanews, the boots are wearing thin already, leave the dead horse some dignity.
How about something regarding news with technology, communications, broadband, video on demand, and whats next???
HD-DVD vs Blu was interesting 5 days ago.... glord, I hope there will be something new next week to tune into....
peace out.
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|I agree. Now that the only high definition format worth putting money into is gone it's time to go back to regular DVD's and high definition cable/satellite TV.
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|If it bring betanews ad revenue you'll be seeing it.
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|There was this news about Sony improving the production method of Blu-ray drives and the prices is going to significantly drop soon.
I forgot the source, so I can't really confirm anything, but some stuff(price) might change soon.
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|It's been mentioned here before and in all liklyhood it was going to happen sometime.
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|right.
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|Lets get one thing straight, Sony will not see any market adoption until there are players that go under $200. Other wise it will take so long that, everyone behind bluray will find themselves head to head with digital downloads before they can get mass adoption rates.
www.talkprice.net
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|++ to that
history has shown time and time again that price point IS the king.
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|Lets get one thing straight, its not just sony who will see market adoption. There are plenty of other players (LG, samsung, phillips, etc) that are part of the BRA. Just because sony has to make its products expensive doesnt mean others have to. We will see cheap blu-ray players and I have a feeling we will see them soon
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|Sell the technology to china, when their player hits the market it will play HD-DVD's. If it takes off and films start appearing again then who knows, they might find there is a market after all.
Hopefully by then sony will be be screwing everyone with licience fee's, profile updates and disk manufacturing costs to cope with $100 players.
With everyone still happy with DVD, the thought of a decent upscaler that also plays HD media might be a hit next time round.
Yea, i dont like sony lol
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|More wishful thinking. There there, time to move on with your life.
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|Oh im sorry, and here's me thinking everyone was entitled to an opinion.
There there, time to move on with your life.
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