Toshiba Takes HD DVD To China
By Shane C. Buettner November 3, 2005 — Toshiba is apparently going to attempt to swamp the market with HD DVD players ahead of the arrival in stores of standalone Blu-ray disc players or PlayStation 3, but is taking a high-risk route in doing so. The HD DVD developer and backer reached an agreement with and licensed their technology to Chinese manufacturers, opening the door to inexpensive players and the kind of price wars that have turned current standard definition DVD players into ubiquitous commodity items.

In taking this route to secure market share Toshiba runs several risks. An obvious one is having Chinese players for sale at prices that undercut those of their own Toshiba-branded HD DVD players, which were stated to carry a price around $999. And I wouldn't be sure that open licensing in China right out of the gate will make HD DVD more attractive to Hollywood studios who are by their nature overly paranoid about piracy, regardless of how robust the format's security is. Also, one has to wonder if there's still enough time for HD DVD to get a big jump on Blu-ray given that PlayStation 3 is scheduled to launch in Spring of '06, now just a few months away.

On the plus side for Toshiba is the opportunity for a head start of any kind, especially since it's widely known that Chinese players at low costs being sold through mass retailers are what drove DVD player sales through the roof. It's not a secret that Sony and the other Blu-ray companies would prefer to delay the inevitable transition to commodity pricing as long as possible. This may put pressure on the Blu-ray camp to cut costs at a time when it has already been granting technological concessions to studios and manufacturers that were previously in the HD DVD camp in order to gain their support.

And Toshiba might not care if it loses some player sales up front but wins the format war (and the licensing royalties that are the spoils) over the long term, much the same way that Microsoft took over the world with its Windows operating system by allowing everyone and their brother to build PC "clone" machines that required their software.