Toshiba’s strategy: Grab China DVD market from Sony at any risk
Posted online: Saturday, November 05, 2005 at 0000 hours IST
In the high-stakes battle with Sony over whose format will power the next generation of DVD players, Toshiba has adopted a potentially perilous strategy: encouraging low-cost Chinese competitors to crank out machines using its standard, known as HD-DVD.
Courting Chinese makers has been largely taboo in Japan, where manufacturers like Sony and Panasonic have long tried to delay the transition of their technologies into cheap commodities.
Toshiba’s decision could have major ramifications in the race for the billions of dollars likely to flow from the next generation of DVD technology, which promises enhanced pictures and audio and more disc space.
Toshiba and Sony have been fighting an increasingly bitter war over which technology will become the industry standard. It is a fight that carries particular significance for Sony, which once championed the higher-quality Betamax but still lost the battle over the standard for videocassettes.
In the latest brawl, negotiations to merge their formats failed, so the two sides have been lobbying Hollywood studios, disc manufacturers, computer giants like Dell and software moguls like Microsoft, as well as retailers like Best Buy.
Sony and others developing a technology known as Blu-ray have won major victories by persuading more studios to put movies into their format. Sony also plans to include Blu-ray technology in its PlayStation 3 game consoles when they are released in the spring, effectively turning them into Blu-ray DVD players.
To thwart Sony, Toshiba has reached a bargain with Chinese manufacturers. By making its technology available to them, Toshiba hopes to get cheaper HD-DVD players in the stores months ahead of Sony, Panasonic and other Blu-ray companies.
This would help Toshiba outmaneuver Sony much as Panasonic outfoxed Sony over Betamax machines. Toshiba, industry analysts say, also knows that DVDs became a mass-market item in the US after low-priced models arrived from China and filled big-box retailers like Wal-Mart.
But inviting the Chinese to drive down prices is risky. Toshiba also makes DVD players, so the Chinese machines could undersell Toshiba players.
Sony and the Blu-ray group are licensing their technology more selectively. Analysts call this an effort to prevent low-cost manufacturers — including those from China — from quickly driving down the price of Blu-ray machines when they go on sale next year.
Many manufacturers are also wary of licensing their technology to the Chinese because of some past difficulties in collecting licensing and royalty fees.
‘‘Toshiba can’t back out of this format war for face-saving reasons,’’ said Richard Doherty, research director at the Envisioneering Group, a market research group in Seaford, NY. ‘‘But pushing ahead means dealing with the Chinese sooner rather than later. They’ll risk dealing with the Chinese if it means getting the format out quicker.’’
The contrasting strategies underscore the increasingly uncomfortable choices Japanese electronics makers must make as China’s manufacturing might grows. Japanese companies either keep their technology away from the Chinese, or they license technology to the Chinese and make money off the royalties.
‘‘Japanese companies basically follow one of two models: They’re open or they’re closed,’’ said Koya Tabata, an electronics analyst for Credit Suisse First Boston. ‘‘Japanese makers didn’t have to make these sorts of decisions when they used to have unquestioned market dominance.’’
Although most big Japanese companies have factories in China, their attempts to shield their products from low-cost competitors prompt frequent charges by Chinese companies and government officials of technological miserliness.
It is often a delicate dance. Sharp assembles its flat-panel televisions at factories in China, the US and Spain. But the liquid-crystal screens at the heart of the products are produced at only two factories in Japan. Panasonic, Canon and other Japanese electronics giants have taken a similar tack.
Toshiba and Canon have taken a similar tack, vowing to keep at home production of flat screens using a promising new technology called surface-conduction electron-emitter displays. Matsushita Electric, which owns Panasonic, makes key components like the lasers in its DVD recorders and the lens and chipboards for digital cameras only in Japan.
Japan’s wariness toward China is not unwarranted. Many Japanese manufacturers have waged costly legal battles against Asian rivals to recoup unpaid royalties and settle patent-infringement allegations.
Toshiba, though, bucked Japanese convention when, in the mid-1990s, it licensed technology for making its powerful new flash memory chips to Samsung.
As a result, the fledgling chips became cheap and plentiful. Toshiba-made chips now sit at the heart of digital music players like the iPod, too, even though Samsung has won a big portion of the global market.
Toshiba says it is following a similar strategy with HD-DVD. ‘‘When a technology is established, it’s wise to keep technology that will help you stand out,’’ from competitors, said Keisuke Ohmori, a Toshiba spokesman. ‘‘When you want to establish a new market, you need a different approach to gain sales volume.’’
In September, two of China’s largest made-to-order DVD makers, Amoi and JiangKui, said they would start using Toshiba’s HD-DVD format to produce high-definition disc players for other companies as early as next year. The companies cited Toshiba’s greater willingness to share its technology.
‘‘Compared to the Blu-ray standard, the DVD Forum has been more friendly and open to the Chinese consumer electronics manufacturers,’’ JiangKui, located in eastern city of Zhenjiang, said in a statement, referring to the industry body that has backed Toshiba’s HD-DVD format.
Appealing to the Chinese this early in a product’s life cycle could backfire, of course. But with Sony and its powerful allies gaining momentum in the standards battle, Toshiba may be desperate to fight back, industry analysts said.
By contrast, Sony has been more tight-lipped about its technology. While Sony says Blu-ray technology is available to those willing to pay, it admits to heavily screening newcomers. This is partly to prevent the technology from flowing to companies that could defeat the extensive anti-pirating controls that will be built into Blu-ray recorders to restrict disc copying.
—Martin Facklet and Ken Belson / NY TIMES
Viser resultater 1 til 9 av 9
11-09-2005, 09:20 #1
Toshiba går for HD-DVD push i Kina
11-09-2005, 09:47 #2
En forutsetning for at en slik taktikk skulle lykkes er at tilgjengeligheten på SW er god.
Jeg kan ikke se SW tilgjengelighet nevnt med et ord, annet enn at Blu-Ray har vunnet slag om å kapre studioene.
11-09-2005, 10:59 #3Opprinnelig postet av OleM
Ikke umulig at HD-DVD får et ekstra kraftig feste på det asiatiske markedet, Bollywood et all lager langt flere filmer, dessuten så vil nok også Hollywood utgi sine filmer på HD-DVD i denne verdensdelen dersom det er det forbrukerne sitter med av spillere.
Når det gjelder situasjonen her i "vesten" så er det fortsatt uklar da det kjempes fortsatt om de ulike delene av standarden for blu-ray når det gjelder bla den interaktive delen (iHD vs BR-Java) og kopibeskyttelsen (mulighet til å laste på server etc). Og selve produksjonen av Sonys supertynne platesubstrat er fortsatt i det blå. Inntil produktene kommer i butikkhyllene er det fortsatt rom for en del ny grep og endringer ser det ut til.
11-09-2005, 11:08 #4
Det er nok et smart trekk av Toshiba. Bollywood har jo enormt mange seere... Kina og India har jo enorme befolkningsmasser. Mye tyder på at Toshiba satser på en "billig" strategi, for å få størst mulig gjennomslag i markedene fort som mulig.
11-09-2005, 13:33 #5
har ikke kineserne tenkt å komme med sitt eget HD-DVD system? synes å huske å ha lest det et eller annet sted. da slipper de lisens betalingene.
11-09-2005, 14:07 #6
Jeg kan ikke huske Bollywood eller kinesiske studioer (?) noen gang tidligere har vært nevnt som argument i formatkrigen.
11-10-2005, 12:09 #7Opprinnelig postet av OleM
11-10-2005, 12:11 #8Opprinnelig postet av jfinneru
11-10-2005, 14:35 #9
var vel muligens denne jeg hadde i tankene