Toshiba Spends $835M to Back PS3

[GMichael]

After HD DVD Drop, Toshiba Spends $835M to Back PS3

http://www.dailytech.com/After+HD+DV...ticle10826.htm

Sony gives Toshiba something in return for its troubles -- Japanese Cell chip plants for $835M

A new twist has emerged with the death of HD DVD. After Warner, Best Buy, Walmart and Netflix jumped on the Blu bandwagon, the fate of HD DVD was already sealed.

Despite the grim news, the principal HD DVD developer, Toshiba Corporation, refused to initially comment on its plans for its HD DVD. However, as many analysts predicted, Toshiba came out last week and officially surrendered to Blu-ray.

Many saw Toshiba's willingness to give up on HD DVD as a logical business decision and perhaps an admission of Blu-ray's superiority. However, there might be a little more to the story. Reuters reports that on Wednesday Toshiba and Sony Corporation, one of Blu-ray's principal developers, agreed to a major business deal, reached just after Toshiba made its final HD DVD decision.

Sony agreed to sell it microchip processing facilities in western Japan for approximately $835M USD. These facilities currently produce Cell processors and RSX graphic chips. Toshiba will enter the joint venture with Sony on April 1, 2008.

Toshiba, IBM and Sony were the principal developers of the Cell microprocessor, but Toshiba previously showed little interest in using the chip for any of its own projects. Sony touts the Cell broadband engine in its Playstation 3 consoles; IBM uses the Cell processor in high performance computing clusters. Toshiba has vowed to now use the Cell in its upcoming products.

While Toshiba and Sony entered into talks back in October 2007 and reached a tentative agreement to sell the cell facilities, the two companies continued to haggle about the price. Sony's concession of what is considered a favorable price for Toshiba will likely strike many following Toshiba's drop as HD DVD as more than a coincidence, and perhaps a sign of an informal agreement.

The other interesting aspect of the move is that it indicates a clear shift by Toshiba to back the PS3. The PS3, which last month outsold Microsoft's Xbox 360, previously had few ties to the company; while Microsoft's number one ally in hardware manufacturing has always been Toshiba. Toshiba manufacturers several components for the Xbox 360, including the HD DVD add-on, and the Microsoft Zune MP3 players.

Toshiba's flip-flop may have been in the cards for a while. Microsoft showed little remose as HD DVD took second place to Blu-ray; a move Toshiba must have recognized from its American ally. Now the solidified PS3 venture between Sony and Toshiba indicates that Toshiba now has switched to backing the PS3 almost exclusively, another victory for Sony.

[kexodusc]

Yep. We all tend to be guilty sometimes of falling love with our bets, hence the bitter debates on the format war.

Sony is certainly guilty of this when they're on the losing in, but I've always said here Toshiba was in other lines of businesses and that HD-DVD was just another product to them. So I'm not surprised to see them get on with business. They've always been a pragmatic company.

Nice to see the PS3 finally gains some steam too. I'm still getting one, but I think there's one more price drop coming before it becomes attractive to me. There's still no games that really stand out to me yet either, but that's sure to change.

[L.J.]

I may pick up a 2nd one if the price drops. The music streaming & DVD/BR playback in a 2nd room would be worth it. I can't tell you how may times my wife tried to play a BR on the DVD player up front.

But it has to be backward compatible.

[pixelthis]

THIS bone allows tosh to save face.
USED TO BE wars were fought, people died, civilizations crumbled.
Nowadays the worst is a dustup like the latest "format war".
And when its over everybody shakes hands and gets back to business.
Nobodies dead, and not a lot of wealth is destroyed.
Now if we could get countries to act this way...