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Tuesday, May 17, 2005

Sony, Toshiba presidents to meet on new DVD format

Hello All,

The presidents of Sony Corp. (6758.T: Quote, Profile, Research), Matsushita Electric Industrial Co. (6752.T: Quote, Profile, Research) and Toshiba Corp. (6502.T: Quote, Profile, Research) will meet as early as this week to try and hammer out an agreement on a unified format for next-generation DVD technology, a source close to the matter said on Tuesday.

Sony and Toshiba, heading rival groups, have waged a three-year war 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 discs.

The high-level talks offer new hope for negotiations that appeared to have reached an impasse in recent days. A senior Toshiba official was quoted on Monday as saying one format based on Sony technology would be "extremely difficult" at this stage.

Both sides still believe one standard is the best scenario, knowing that a prolonged format battle like the one between VHS and Betamax two decades ago would likely discourage consumers from shifting to advanced discs and stifle the industry's growth.

"We continue to believe in the merits of establishing one format but discussions up until now have not been able to produce an agreement," said the source, who spoke on condition of anonymity. "So the talks will be taken to a higher level."

The source said it had not been decided whether Toshiba would send its current president, Tadashi Okamura, or incoming president Atsutoshi Nishida. Likewise, it is not clear whether Sony will be represented by Ryoji Chubachi, who is scheduled to become president in June, or current president Kunitake Ando.

Kunio Nakamura, president of Panasonic products maker Matsushita, would likely attend the talks, the source said.

Officials from Toshiba, which backs a new DVD technology called HD-DVD, and Sony and Matsushita, which support a rival standard known as Blu-ray, began meeting earlier this year to try and establish a format incorporating technology from both sides.

The negotiations have been leaning towards unifying the formats based on the Blu-ray disc structure, but Toshiba continues to maintain that adopting the HD DVD structure would be more cost efficient because it is closer to the current DVD.

Toshiba has also been under pressure from parts makers and film studios in the HD DVD camp not to give in.

Just last week Toshiba announced that it had developed a triple-layer HD DVD disc with data capacity of 45 gigabytes, 50 percent more than a previously unveiled version and enough to hold 12 hours of high-definition movies.

Warner Home Video and Universal Studios Home Entertainment both issued press releases endorsing Toshiba's new disc.

The announcements were seen as a move to help steer talks more in favour of the HD DVD side.

In addition to Sony and Matsushita, Blu-ray members also include computer giant Dell Inc. (DELL.O: Quote, Profile, Research), Samsung Electronics Co. Ltd. (005930.KS: Quote, Profile, Research) and Philips Electronics NV (PHG.AS: Quote, Profile, Research).

HD DVD technology is also backed by NEC Corp. (6701.T: Quote, Profile, Research), Sanyo Electric Co. Ltd. (6764.T: Quote, Profile, Research) and several other firms.

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

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 television.

Slow progress on unification could hinder the launch of new products.

Toshiba has unveiled plans to launch HD DVD players in the last quarter of 2005 while Sony announced plans this week to introduce its new PlayStation video game console in the spring of 2006 equipped with a Blu-ray disc drive.

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Talk to ya soon,

Donnie Hoover

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