Sony dismisses concerns over its DVD plans

Sony on Tuesday dismissed concerns about the future of its next generation DVD standard after Intel and Microsoft threw their weight behind a competing format being championed by Toshiba, the rival Japanese consumer electronics giant. Intel and Microsoft confirmed a report in some editions of Monday’s Financial Times that they were endorsing Toshiba’s HD-DVD standard over Sony’s Blu-ray Disc because it had the best consumer features.

“There will be no impact” from Microsoft and Intel’s stated support for HD-DVD, Sony said on Tuesday, arguing that its format offered better copyright protectionamong other things. The decision by the personal computer industry’s two most influential companies to back HD-DVD poses another major challenge for Sony’s chief executive Sir Howard Stringer – less than a week after he announced a restructuring package aimed chiefly at reviving the group’s struggling core consumer electronics division. The division has been hit by the company’s failure to capitalise on booming demand for flat screen TVs and by the success of rival Apple’s portable digital music player, the iPod.

However, analysts said while the Microsoft and Intel move was unfortunate for Sony, the support of content providers such as the Hollywood movie studios was more important to the success of both formats. “It’s positive for Toshiba but it’s not decisive,” said Carlos Dimas, electronics analyst at CLSA in Tokyo.

“What is going to decide the race is the content makers, the movie studios, because they have to find the right technology in terms of IP [intellectual property] management and also in terms of economic efficiency,” Mr Dimas said. Even if Microsoft supported HD-DVD, it would not be difficult to write software to enable PCs to use the Blu-ray Disc standard, he said.

Sony said it would accelerate its Blu-ray Disc format promotion and product development. “The latest developments in BD technology have dramatically reduced manufacturing costs,” the Sony representative said. “Additionally, BD’s comprehensive content management system that protects against illegal copying has been widely supported by content providers.”

However, Toshiba, which heads the DVD forum supporting HD-DVD, argued on Tuesday that the endorsement of Intel and Microsoft was likely to make HD-DVD the standard next generation DVD format for next generation PCs.

While the total unit sales of DVD players and recorders amounted to about 80m a year, the number of PCs sold was 180m, he said.

Toshiba and Sony have been at odds for several years over their rival standards for next generation discs capable of recording high-definition films and video games.

Their differences have raised the prospect of a damaging “format war” reminiscent of the clash between VHS and Betamax video cassette recorders more than 20 years ago.

Hollywood has split over the technology, with Time Warner, Viacom, Paramount and NBC Universal supporting HD-DVD and Walt Disney, 20th Century Fox, Sony Pictures and MGM, which Sony recently took over, backing Blu-ray.

Given that Hollywood is almost evenly split on the issue, “I think that we are heading to a major format war,” CLSA’s Mr Dimas said.

The battle between the two standards was also likely to be fought out in the games market, where Microsoft and Sony offer rival games consoles, he said.


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