Toshiba abandons HD DVD but Microsoft stays mum
Published by Admin on 19.2.08 at 2/19/2008 09:09:00 PM.
Toshiba will discontinue its HD DVD products, it said today, handing victory to rival high definition disc format Blu-ray Disc.
The company will no longer develop, manufacture and market HD DVD players and recorders.
It will reduce shipments of HD DVD players and recorders to retail markets and aims to cease the businesses altogether by the end of March.
But the Japanese electronics giant pledged to provide full product support and after-sales service for owners of Toshiba HD DVD products.
Recent changes in the market prompted the decision, Toshiba said. Early this year, Warner Bros. said it would stop issuing movies on HD DVD in the coming months and rely exclusively on Blu-ray Disc. The Hollywood studio was one of three major studios remaining in the HD DVD camp, and its defection created widespread belief that the battle between HD DVD and Blu-ray Disc was now over.
More recently, major US retail chain Wal-Mart announced it would phase out the sale of HD DVD products, moving to exclusivity with Blu-ray Disc. Electronics retailer Best Buy also said it would back Blu-ray Disc, but it did not say it would stop offering HD DVD.
Warner made its decision based on consumer confusion and indifference to high definition movies, an indifference that cost Hollywood in lost revenue, it said. Wal-Mart said US customers preferred Blu-ray Disc movies and hardware. Blu-ray Disc is the high definition disc format championed by Sony.
"This once again shows why incompatible and mutually exclusive formats should be avoided at all cost by the industry," said Carl Gressum, a senior analyst at Ovum. "It reduces profitability and delays customer adoption."
"The big question is, however, the impacts on Toshiba as an electronics company," he added. "It has after all bet its disc media business on HD DVD, as well as gone for HD DVD integration into some of its laptop PCs. The channel has inventory to clear, and demands from owners of HD DVD players."
Toshiba said its decision came after careful analysis of the long-term impact of continuing the format war, and said a swift decision was called for to help the high definition market develop.
The company also pledged to remain a player in the high definition market. Developing HD DVD created many assets for Toshiba and its partners, which include Microsoft, Intel, HP, and Universal Studios, the company said.
Microsoft shrugged off HD DVD's demise, declining to say if or when it would support Blu-ray Disc for the Xbox.
Microsoft steadfastly backed HD DVD, selling an external drive for the Xbox for $129.95 . That offer was still on the NZ Xbox website as of today, despite the news that Toshiba will scuttle the format.
Microsoft's decision to make the HD DVD drive external rather than within the console "was quite a strategic move on their part," said Paul O'Donovan, principal analyst with Gartner.
However, it's inevitable that future Xbox versions, as well as other gaming systems aimed at tighter integration with entertainment systems, will incorporate Blu-ray Disc drives, said O'Donovan. The Xbox currently has a standard DVD drive.
Sony gained momentum for its Blu-ray player by putting it in its PlayStation 3 console, according to research company IDC.
The PS3's "dual roles as a gaming console and a next-generation DVD player have made it an important part of the format war," according to the report.
Prior to Toshiba's announcement, Microsoft downplayed the rumors of HD DVD's death, contending buyers are more interested in gaming functions.
"We do not believe the recent reports about HD DVD will have any material impact on the Xbox 360 platform or our position in the marketplace," the company said in a statement. "It is premature to speculate but we do know from market data that HD movie playback is not a primary purchase driver for consumers buying video game consoles."
O'Donovan agreed the company likely won't face declining sales of its Xbox gaming console. But Microsoft's greater problem may be getting rid of the external HD DVD drives in its inventory.
HD DVD is "dead and gone" now, O'Donovan said.
Timeline: HD DVD vs. Blu-ray Disc
The high-definition movie disc battle between HD DVD and Blu-ray Disc can be traced all the way back to 2000, when companies began experimenting with using new blue lasers in optical disc systems.
Because the wavelength of blue light is shorter than that of the red lasers used in DVD, less physical space is needed to record each bit of data and so more information can be crammed onto a DVD-sized disc. This extra space was needed to store the new high-definition video and TV services that were starting to be commercialised around that time.
But what started in 2000 as technical research became a battle between the world's largest electronics companies and movie studios, with the consumer caught in the middle.
Here's a look at the major milestones from the first research:
2000
Oct. 5 -- Sony and Pioneer unveil DVR Blue at Japan's Ceatec show. The format would go on to form the basis for first-generation Blu-ray Disc BD-RE.
Nov. 1 -- Sony announces the development of Ultra Density Optical (UDO), a blue-laser optical disc format proposed to replace magneto-optical discs.
2002
Feb. 19 -- Led by Sony, nine of the world's largest electronics companies unveil plans for Blu-ray Disc.
Aug. 29 -- Toshiba and NEC propose to the DVD Forum the next-generation optical disc format that will become HD DVD.
Oct. 1 -- Prototypes of both formats are unveiled at Japan's Ceatec exhibition. Sony, Panasonic, Sharp, Pioneer and JVC showed prototype Blu-ray Disc recorders while Toshiba showed a prototype under the name Advanced Optical Disc (AOD).
2003
Feb. 13 -- Licensing of Blu-ray Disc begins. Player makers pay US$20,000 to licence Blu-ray while the content-protection system licence carries a $120,000 annual fee and additional charge of $0.10 per player. Media makers pay $8,000 annually and $0.02 per disc for the copy protection system.
April 7 -- Sony announces its Blu-ray Disc-based Professional Disc format for data archiving applications.
April 10 -- Sony puts on sale in Japan the world's first Blu-ray Disc recorder, the BDZ-S77. It's based on a 23GB cartridge version of the BD-RE disc and costs ¥450,000 ($5200). The machine and a later model from Panasonic lack support for prerecorded movies that will launch later and prove an expensive early step into next-generation video.
May 28 -- Mitsubishi Electric joins the Blu-ray Disc group.
2004
Jan. 7 -- Toshiba unveils its first prototype HD DVD player at CES. The player includes backwards compatibility with DVD.
Jan. 12 - Hewlett-Packard and Dell put their support behind Blu-ray Disc.
June 10 -- The first commercial version of HD DVD-ROM is approved by the DVD Forum.
Sept. 21 -- Sony announces the PlayStation 3 will use Blu-ray Disc.
Nov. 29 -- Paramount Pictures, Universal Pictures, Warner Bros. Pictures, HBO and New Line Cinema announce support for HD DVD.
Dec. 9 -- Disney announces support for Blu-ray Disc.
2005
Jan. 7 -- Backers of both formats promise players and movies in North America by the end of the year -- something that never materialised.
March 24 -- Talk and hope of a common format as Ryoji Chubachi, then Sony's president-elect, says: "Listening to the voice of the consumers, having two rival formats is disappointing and we haven't totally given up on the possibility of integration or compromise."
April 21 -- Sony and Toshiba begin discussions on the possibility of a single format. The talks ultimately go nowhere.
Aug. 18 -- Lions Gate Home Entertainment and Universal Music Group decide to back Blu-ray Disc.
Sept. 27 -- Microsoft and Intel put their weight behind HD DVD.
Oct. 3 -- Paramount Home Entertainment says it will offer movies on both HD DVD and Blu-ray Disc.
Dec. 16 -- Hewlett-Packard decides to drop exclusive support for Blu-ray Disc and back both formats.
2006
Jan. 4 -- Bill Gates announces at CES that Microsoft will offer an add-on HD DVD drive for the Xbox 360 console.
March 10 -- Blu-ray Disc-supporter LG Electronics surprises the industry with news that it's developing an HD DVD drive.
March 31 -- Toshiba launches the world's first HD DVD player, the HD-XA1. It cost ¥110,000 ($1280) in Japan.
Nov. 11 -- Sony's PlayStation 3, which packs a Blu-ray Disc drive, goes on sale in Japan.
Dec. 29 -- Hackers report success in breaking through part of the AACS copy protection that's on both HD DVD and Blu-ray Disc.
2007
Jan. 7 -- Seeking to end the battle, LG Electronics unveils a dual-format player, while Warner Bros. shows a prototype disc that holds both an HD DVD and Blu-ray Disc layer so is compatible with players for both formats.
April 17 -- Sales of HD DVD players in North America hit 100,000 since launch.
Aug. 1 -- Microsoft cuts the price of its HD DVD player for the Xbox 360 from US$199 to US$179 and starts offering five free movies.
Aug. 20 -- Paramount and Dreamworks Animation both drop Blu-ray Disc in favor of HD DVD.
Sept. 13 -- Sony says it will use Blu-ray Disc in all high-def video recorders in Japan.
Nov. -- The price of Toshiba HD DVD players drops to US$100 with rebates as the holiday shopping season begins.
Nov. 11 -- Sony begins selling a lower cost version of the PlayStation 3.
2008
Jan. 4 -- Warner Bros. drops its bombshell: it will stop issuing HD DVD movies in the coming months and rely exclusively on Blu-ray Disc. In response the HD DVD Promotion Group cancels its CES news conference.
Jan. 6 -- Akio Ozaka, head of Toshiba America Consumer Products, says at CES: "We remain firm in the belief that HD DVD is the format best suited to the wants and needs of consumers." In response Sony CEO Howard Stringer, with a grin on his face, says "All of us at Sony are feeling blue today."
Jan. 14 -- Toshiba cuts the price of HD DVD players with the HD-A3 seeing a retail price of US$150.
Feb. 11 -- NetFlix and BestBuy say they will phase out HD DVD.
Feb. 15 -- Wal-Mart, the world's largest retailer, says it will phase out HD DVD by June.
Feb. 16 -- Japanese public broadcaster NHK reports Toshiba has halted production of HD DVD players. Several additional local media reports confirm and The Nikkei business daily says Toshiba has decided to stop developing the format any further.
Feb. 19 -- Toshiba formally announces it will phase out the production of HD DVD players and recorders by the end of March. The format war is over. Link
The company will no longer develop, manufacture and market HD DVD players and recorders.
It will reduce shipments of HD DVD players and recorders to retail markets and aims to cease the businesses altogether by the end of March.
But the Japanese electronics giant pledged to provide full product support and after-sales service for owners of Toshiba HD DVD products.
Recent changes in the market prompted the decision, Toshiba said. Early this year, Warner Bros. said it would stop issuing movies on HD DVD in the coming months and rely exclusively on Blu-ray Disc. The Hollywood studio was one of three major studios remaining in the HD DVD camp, and its defection created widespread belief that the battle between HD DVD and Blu-ray Disc was now over.
More recently, major US retail chain Wal-Mart announced it would phase out the sale of HD DVD products, moving to exclusivity with Blu-ray Disc. Electronics retailer Best Buy also said it would back Blu-ray Disc, but it did not say it would stop offering HD DVD.
Warner made its decision based on consumer confusion and indifference to high definition movies, an indifference that cost Hollywood in lost revenue, it said. Wal-Mart said US customers preferred Blu-ray Disc movies and hardware. Blu-ray Disc is the high definition disc format championed by Sony.
"This once again shows why incompatible and mutually exclusive formats should be avoided at all cost by the industry," said Carl Gressum, a senior analyst at Ovum. "It reduces profitability and delays customer adoption."
"The big question is, however, the impacts on Toshiba as an electronics company," he added. "It has after all bet its disc media business on HD DVD, as well as gone for HD DVD integration into some of its laptop PCs. The channel has inventory to clear, and demands from owners of HD DVD players."
Toshiba said its decision came after careful analysis of the long-term impact of continuing the format war, and said a swift decision was called for to help the high definition market develop.
The company also pledged to remain a player in the high definition market. Developing HD DVD created many assets for Toshiba and its partners, which include Microsoft, Intel, HP, and Universal Studios, the company said.
Microsoft shrugged off HD DVD's demise, declining to say if or when it would support Blu-ray Disc for the Xbox.
Microsoft steadfastly backed HD DVD, selling an external drive for the Xbox for $129.95 . That offer was still on the NZ Xbox website as of today, despite the news that Toshiba will scuttle the format.
Microsoft's decision to make the HD DVD drive external rather than within the console "was quite a strategic move on their part," said Paul O'Donovan, principal analyst with Gartner.
However, it's inevitable that future Xbox versions, as well as other gaming systems aimed at tighter integration with entertainment systems, will incorporate Blu-ray Disc drives, said O'Donovan. The Xbox currently has a standard DVD drive.
Sony gained momentum for its Blu-ray player by putting it in its PlayStation 3 console, according to research company IDC.
The PS3's "dual roles as a gaming console and a next-generation DVD player have made it an important part of the format war," according to the report.
Prior to Toshiba's announcement, Microsoft downplayed the rumors of HD DVD's death, contending buyers are more interested in gaming functions.
"We do not believe the recent reports about HD DVD will have any material impact on the Xbox 360 platform or our position in the marketplace," the company said in a statement. "It is premature to speculate but we do know from market data that HD movie playback is not a primary purchase driver for consumers buying video game consoles."
O'Donovan agreed the company likely won't face declining sales of its Xbox gaming console. But Microsoft's greater problem may be getting rid of the external HD DVD drives in its inventory.
HD DVD is "dead and gone" now, O'Donovan said.
Timeline: HD DVD vs. Blu-ray Disc
The high-definition movie disc battle between HD DVD and Blu-ray Disc can be traced all the way back to 2000, when companies began experimenting with using new blue lasers in optical disc systems.
Because the wavelength of blue light is shorter than that of the red lasers used in DVD, less physical space is needed to record each bit of data and so more information can be crammed onto a DVD-sized disc. This extra space was needed to store the new high-definition video and TV services that were starting to be commercialised around that time.
But what started in 2000 as technical research became a battle between the world's largest electronics companies and movie studios, with the consumer caught in the middle.
Here's a look at the major milestones from the first research:
2000
Oct. 5 -- Sony and Pioneer unveil DVR Blue at Japan's Ceatec show. The format would go on to form the basis for first-generation Blu-ray Disc BD-RE.
Nov. 1 -- Sony announces the development of Ultra Density Optical (UDO), a blue-laser optical disc format proposed to replace magneto-optical discs.
2002
Feb. 19 -- Led by Sony, nine of the world's largest electronics companies unveil plans for Blu-ray Disc.
Aug. 29 -- Toshiba and NEC propose to the DVD Forum the next-generation optical disc format that will become HD DVD.
Oct. 1 -- Prototypes of both formats are unveiled at Japan's Ceatec exhibition. Sony, Panasonic, Sharp, Pioneer and JVC showed prototype Blu-ray Disc recorders while Toshiba showed a prototype under the name Advanced Optical Disc (AOD).
2003
Feb. 13 -- Licensing of Blu-ray Disc begins. Player makers pay US$20,000 to licence Blu-ray while the content-protection system licence carries a $120,000 annual fee and additional charge of $0.10 per player. Media makers pay $8,000 annually and $0.02 per disc for the copy protection system.
April 7 -- Sony announces its Blu-ray Disc-based Professional Disc format for data archiving applications.
April 10 -- Sony puts on sale in Japan the world's first Blu-ray Disc recorder, the BDZ-S77. It's based on a 23GB cartridge version of the BD-RE disc and costs ¥450,000 ($5200). The machine and a later model from Panasonic lack support for prerecorded movies that will launch later and prove an expensive early step into next-generation video.
May 28 -- Mitsubishi Electric joins the Blu-ray Disc group.
2004
Jan. 7 -- Toshiba unveils its first prototype HD DVD player at CES. The player includes backwards compatibility with DVD.
Jan. 12 - Hewlett-Packard and Dell put their support behind Blu-ray Disc.
June 10 -- The first commercial version of HD DVD-ROM is approved by the DVD Forum.
Sept. 21 -- Sony announces the PlayStation 3 will use Blu-ray Disc.
Nov. 29 -- Paramount Pictures, Universal Pictures, Warner Bros. Pictures, HBO and New Line Cinema announce support for HD DVD.
Dec. 9 -- Disney announces support for Blu-ray Disc.
2005
Jan. 7 -- Backers of both formats promise players and movies in North America by the end of the year -- something that never materialised.
March 24 -- Talk and hope of a common format as Ryoji Chubachi, then Sony's president-elect, says: "Listening to the voice of the consumers, having two rival formats is disappointing and we haven't totally given up on the possibility of integration or compromise."
April 21 -- Sony and Toshiba begin discussions on the possibility of a single format. The talks ultimately go nowhere.
Aug. 18 -- Lions Gate Home Entertainment and Universal Music Group decide to back Blu-ray Disc.
Sept. 27 -- Microsoft and Intel put their weight behind HD DVD.
Oct. 3 -- Paramount Home Entertainment says it will offer movies on both HD DVD and Blu-ray Disc.
Dec. 16 -- Hewlett-Packard decides to drop exclusive support for Blu-ray Disc and back both formats.
2006
Jan. 4 -- Bill Gates announces at CES that Microsoft will offer an add-on HD DVD drive for the Xbox 360 console.
March 10 -- Blu-ray Disc-supporter LG Electronics surprises the industry with news that it's developing an HD DVD drive.
March 31 -- Toshiba launches the world's first HD DVD player, the HD-XA1. It cost ¥110,000 ($1280) in Japan.
Nov. 11 -- Sony's PlayStation 3, which packs a Blu-ray Disc drive, goes on sale in Japan.
Dec. 29 -- Hackers report success in breaking through part of the AACS copy protection that's on both HD DVD and Blu-ray Disc.
2007
Jan. 7 -- Seeking to end the battle, LG Electronics unveils a dual-format player, while Warner Bros. shows a prototype disc that holds both an HD DVD and Blu-ray Disc layer so is compatible with players for both formats.
April 17 -- Sales of HD DVD players in North America hit 100,000 since launch.
Aug. 1 -- Microsoft cuts the price of its HD DVD player for the Xbox 360 from US$199 to US$179 and starts offering five free movies.
Aug. 20 -- Paramount and Dreamworks Animation both drop Blu-ray Disc in favor of HD DVD.
Sept. 13 -- Sony says it will use Blu-ray Disc in all high-def video recorders in Japan.
Nov. -- The price of Toshiba HD DVD players drops to US$100 with rebates as the holiday shopping season begins.
Nov. 11 -- Sony begins selling a lower cost version of the PlayStation 3.
2008
Jan. 4 -- Warner Bros. drops its bombshell: it will stop issuing HD DVD movies in the coming months and rely exclusively on Blu-ray Disc. In response the HD DVD Promotion Group cancels its CES news conference.
Jan. 6 -- Akio Ozaka, head of Toshiba America Consumer Products, says at CES: "We remain firm in the belief that HD DVD is the format best suited to the wants and needs of consumers." In response Sony CEO Howard Stringer, with a grin on his face, says "All of us at Sony are feeling blue today."
Jan. 14 -- Toshiba cuts the price of HD DVD players with the HD-A3 seeing a retail price of US$150.
Feb. 11 -- NetFlix and BestBuy say they will phase out HD DVD.
Feb. 15 -- Wal-Mart, the world's largest retailer, says it will phase out HD DVD by June.
Feb. 16 -- Japanese public broadcaster NHK reports Toshiba has halted production of HD DVD players. Several additional local media reports confirm and The Nikkei business daily says Toshiba has decided to stop developing the format any further.
Feb. 19 -- Toshiba formally announces it will phase out the production of HD DVD players and recorders by the end of March. The format war is over. Link