Toshiba makes it official, abandons HD-DVD format

IDG News Service - Toshiba Corp. announced Tuesday that it will discontinue its HD-DVD products, handing victory to rival high-definition disc format Blu-ray Disc.

The company said it will no longer develop, manufacture and market HD-DVD players and recorders. Instead it will reduce shipments of HD-DVD players and recorders to retail markets with plans to cease the businesses altogether by the end of March.

But the Japanese electronics giant pledged to provide full product support and after-sales service for owners of Toshiba HD-DVD products.

Recent changes in the market prompted the decision, Toshiba said. Early this year, Warner Bros. Entertainment Inc. said it would stop issuing movies on HD DVD in the coming months and rely exclusively on Blu-ray Disc. The Hollywood studio was one of three major studios remaining in the HD-DVD camp, and its defection created widespread belief that the battle between HD DVD and Blu-ray Disc was now over.

More recently, major U.S. retail chain Wal-Mart Stores Inc. announced it would phase out the sale of HD-DVD products, moving to exclusivity with Blu-ray Disc. Electronics retailer Best Buy Co. also said it would back Blu-ray Disc, but it did not say it would stop offering HD DVD.

Warner Bros. made its decision based on consumer confusion and indifference to high-definition movies, an indifference that cost Hollywood lost revenue, it said. Wal-Mart said U.S. customers preferred Blu-ray Disc movies and hardware. Blu-ray Disc is the high-definition disc format championed by Sony Corp.

"This once again shows why incompatible and mutually exclusive formats should be avoided at all cost by the industry," said Carl Gressum, an analyst at Ovum. "It reduces profitability and delays customer adoption."

"The big question is, however, the impact on Toshiba as an electronics company," he added. "It has, after all, bet its disc media business on HD DVD, as well as gone for HD-DVD integration into some of its laptop PCs. The channel has inventory to clear, and demands from owners of HD-DVD players."

Toshiba said its decision came after careful analysis of the long-term impact of continuing the format war, and said a swift decision was called for to help the high-definition market develop.

The company also pledged to remain a player in the high-definition market. Developing HD DVD created many assets for Toshiba and its partners, which include Microsoft, Intel, HP and Universal Studios, the company said. Toshiba plans to work with these companies to seek future business opportunities.