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Japan's Toshiba conceded defeat yesterday to rival Sony in a long-running DVD format war, ending consumer confusion but leaving about one million people with expensive machines doomed to become obsolete. Toshiba said it would stop selling its HD DVD machines by the end of March, clearing the way for the Blu-ray format developed by Sony and its partners to assume the title of industry standard.

The victory is sweet revenge for Sony, which learned its lessons well from a defeat in a similar format war that erupted in the late 1970s between the VHS and Betamax types of video cassettes. Analysts say the end of the format war will reduce consumer confusion and should encourage the Hollywood studios to bring out more movies on Blu-ray.

A"Blu-ray is the winner so now the studios will start coming out with more releases. So it's good news for consumers,A" said Claudio Checchia, a research manager at technology information firm IDC in Singapore. But that is little solace for those Toshiba customers who are now left with what Checchia described as A"a very expensive device to play standard DVDsA".

Toshiba has sold 700,000 HD DVD players globally, while 300,000 more HD DVD drives have been sold for Microsoft's next-generation Xbox 360 video game console and many more have been put into laptop computers. Blu-ray and HD DVD both offer cinematic-quality images and multimedia features, but the movie studios were eager to see the emergence of just one standard, while many consumers had been reluctant to buy a machine that faced the ignominy of becoming nearly useless.

HD DVD's fate was sealed by a series of heavy setbacks, with Hollywood titan Warner Brothers and US retail giant Wal-Mart both throwing their weight behind Blu-ray. Toshiba president Atsutoshi Nishida said that Warner Brothers' decision to abandon HD DVD A"was a real bolt out of the blue, and the impact was very bigA".

A"We made a quick decision, judging that there is no way of winning the competition,A" he said. A"It was an agonising decision for me, but I thought if we kept running this business it would have grave ramifications for the management of our company.A" The Blu-ray victory is a boost for Sony, which did

its utmost to try to ensure that the technology did not become irrelevant like Betamax.

A"If you look at it from a purely technical side, HD DVD was perhaps slightly superior compared with Blu-ray,A" Checchia said. The key to Sony's success this time around was that its chief executive Howard Stringer, a former head of the company's North America division, drew on his Hollywood contacts to drum up support for Blu-ray.

A"At the time of the Betamax they basically decided to go on their own. This time they went out and they built support from both the industry and from the studios,A" Checchia said. Blu-ray's success was also helped by its inclusion in Sony's PlayStation 3 video-game machine. As well as ending sales of stand alone high-definition machines, Toshiba said it would stop volume production of HD DVD disk drives for computers. It will also assess whether to keep making notebook PCs with integrated HD DVD drives.

But it will continue to provide after-sales support for people who have already bought its next-generation DVD players and recorders. And if it can clear hurdles to design software for Blu-ray, it could use a joint venture with Samsung Electronics on optical disks to make Blu-ray players, analysts said. Toshiba can also enter into an OEM (orginal equipment manufacturer) deal with Blu-ray supporters Sony or Matsushita Electric Industrial to procure Blu-ray products.

Toshiba also said it would now focus on more profitable business areas, such as NAND flash memory chips that are essential for portable music players and other consumer electronics. Shares of Toshiba closed down 0.6 per cent at 824 yen ($0.78) yesterday. They had climbed on Monday amid speculation that the company was planning to scrap its HD DVD format.

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Publication:7 Days (Dubai, United Arab Emirates)
Date:Feb 20, 2008
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