Giant concedes defeat

TOKYO — Japanese electronics giant Toshiba formally conceded defeat Tuesday in the battle between rival high-definition DVD formats.

Speaking to reporters at the company’s headquarters in Tokyo, prexy and CEO Atsutoshi Nishida confirmed earlier reports that Toshiba will cease making and shipping players, recorders and other products in the HD DVD formats, with the end coming by March 31.

“We realized that if we were to continue in this business on such a small scale, we would only inconvenience our customers and partners,” Nishida explained. “We also saw that, from a competitive standpoint, there was no way we could win.”

Toshiba’s withdrawal leaves the field clear for the Blu-ray camp led by Sony, which has been battling Toshiba and its HD DVD allies, including Intel and Microsoft, for nearly six years.

Warner Bros.’ decision last month to stop selling HD DVD discs and support only Blu-ray “had a major impact” on the situation, Nishida admitted. “After that we had to make a decision quickly.”

Nishida emphasized that Toshiba will not abandon consumers who have already taken the HD DVD plunge, but will offer various support, such as maintaining call centers and stocking parts for the next eight years. Toshiba has sold a total of 700,000 HD DVD players worldwide, including 10,000 in Japan. It has also shipped 20,000 HD DVD recorders, all in the domestic market. There are also nearly 300,000 PCs worldwide installed with HD DVD hard drives, according to Toshiba figures.

Nishida also confirmed that Toshiba will continue in the conventional DVD business. He said, though, that the company has no plans to have another go at next-generation DVD.

As for the Paramount studio and other Hollywood supporters of the HD DVD format, Nishida said he couldn’t say what their future plans will be. “They will have to make their own decisions regarding (HD DVD) software — we have no say so regarding that.” He also refused to speculate about the impact the withdrawal from HD DVD will have on Toshiba’s corporate earnings for the current fiscal year, saying only that the company is conducting a financial review and will release its findings later.

Toshiba also announced that it will build two state-of-the-art flash memory chip plants, one in Yokkaichi, Mie Prefecture in central Japan, and other in Kitakami, Iwate Prefecture in northern Japan. Construction will start in the spring of 2009 and finish in 2010.

SanDisk Corporation will partner Toshiba’s partners in one of the plants, with the deal inked on Tuesday. The plant will devote 50% of its capacity to manufacturing 300mm (12 inch) wafers for NAND flash memory under the partnership deal, with the partners sharing wafer output and funding 50/50. Toshiba will manage the other half of the plant’s production, supplying half the output to SanDisk.

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