Sony,Toshiba to Avoid War

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Sony, Toshiba Mull Unified Format to Avoid DVD War

Japan's Sony Corp. and Toshiba Corp. are in talks to develop a common standard for next-generation DVDs and end a fierce battle over formats that has been threatening to stifle the industry's growth.

Sony and Toshiba, heading rival groups, have waged a three-year battle to have their new technology standards adopted by the industry and gain pole position in the multi-billion dollar markets for DVD players, PC drives and optical disks.

While a final deal is still far from certain, both camps are well aware that a drawn-out fight would likely confuse consumers and hinder the industry's development, just like the famous spat between the VHS and Betamax video tape formats two decades ago.

"Toshiba believes a single format will benefit consumers. We are in talks (with the rival camp and related parties) and we will continue engaging in the talks," a Toshiba spokeswoman said.

Sony's Blu-ray technology is backed by a group including Dell Inc., Samsung Electronics Co. Ltd., Philips Electronics NV, and Matsushita Electric Industrial Co. Ltd., maker of Panasonic brand products.

Toshiba, with NEC Corp. and Sanyo Electric Co. Ltd., has been promoting a technology called HD DVD.

At the core of both formats are blue lasers, which have a shorter wavelength than the red lasers used in current DVD equipment, allowing discs to store data at the higher densities needed for high-definition movies and televisions.

Electronics companies hope the technology will spark a new wave of purchases for DVD players, and Hollywood's movie studios hope to benefit from a new round of buying of advanced DVDs.

Sony and Toshiba have reportedly already begun briefing Walt Disney Co. and other Hollywood movie studios for approval of a unified standard, paving the way for the signing of an agreement between the rival camps.

A unified format would be favorable for profitability across the industry because consumers would be more comfortable about buying next-generation products and manufacturers could achieve lower production costs.

A PC maker, for example, would not have to equip its computers with hard drives compatible with both formats.
"This is essentially a good thing because if they can bring the two standards into a single standard it will lower the cost to consumers and lower the cost of adoption for the industry," said Dresdner Kleinwort Wasserstein analyst Damain Thong.

PRODUCT DELAYS

In an interview with Reuters earlier this month in France, Yukinori Kawauchi, the general manager in charge of the new format for Sony, said his company was "open to discussions" on creating a single technology standard.

Kawauchi said at the time that specific proposals had yet to be tabled, but the Nihon Keizai Shimbun business daily reported that Sony has proposed using Blu-ray's disc structure and HD DVD software technology as the basis for a new format.

Toshiba, for its part, has suggested using the HD DVD disc structure and employing Sony's multi-layer data-recording technology, the paper said.

In HD DVD discs a memory layer is sandwiched between two substrates, while in Blu-ray a layer to hold data is put on the surface of a substrate and covered by thin protective layers.

The dominant industry view has been that since HD DVD discs have virtually the same structure as current discs, makers can use much of their existing manufacturing equipment to offer low-priced discs, a critical factor in winning end-user support.

Either way, the clock is ticking on the planned launch of DVD players based on the new formats by the end of the year.

Toshiba, while admitting it is in talks with Sony and others on a unified format, said it has not changed its plan to launch HD DVD-based DVD players and notebook computers equipped with HD DVD drives in the fourth quarter of 2005.

"Now I'm interested to see how soon the makers can come out with products with standardized technology," said Daiwa Institute of Research analyst Kazuharu Miura. "The move could slow down the launch (of products) and let rivals such as Taiwanese makers, that came into the market later, advance in the competition."

The move to a unified format also puts into question the launch of Sony's next-generation PlayStation 3 (PS3), which has been expected to be released in 2006. Sony has said the new game console would be compatible with Blu-ray technology.

"It could take both camps some time to develop products based on a new standard, which leaves the risk of development delays for Sony's next-generation game console," Goldman Sachs analyst Yuji Fujimori wrote in a note to clients.

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Finally they are talking some sense now .................Atleast they realised that its better to have a single format in the long run.......beneficial to both the consumers as well as the companies.
 
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