Toshiba might not be that stupid

Todd talked a bit in #379 about Toshiba potentially releasing a new high density DVD replacement option very soon after the much publicised dropping of HD-DVD. Most of the commentary has been negative about the move. I reserve my opinion though. Toshiba management may very well be dumber than a box of hammers, there are some compelling reasons why this could be a well thought out move though.

I have said before that Blu-Ray has not won anything, HD-DVD just lost. Right now plain old DVD is winning by an extremely large margin and Blu-Ray is not going to close the gap in the short term. I also cannot stress enough that the battle will not be won in the home theater, it will be won in the PC. If you want high def now feel free to buy a Blu-Ray player but I would not recommend buying too many movies as there is a decent chance you will be storing them with your laser discs (Look at the Blockbuster ad on this page for an alternative to buying.) So why might Toshiba be making a smart move?

– Sony owns Blu-Ray. This is not an open standard, any manufacturer must pay Sony and they so not have a history of playing well with others. This does not bode well for competitive pricing in the future.

– HD-DVD was tuned for movies rather than data storage. Once it became obvious it could not win in the movie space it became too expensive to keep going. Some of the protection technology like AACS have license fees that would need to be maintained and the production costs for that technology probably had bad economics.

– Having better backwards compatibility with DVD in the new standard will help to drive PC adoption of that technology.

– For name brand manufacturers going Blu-Ray is a double edged sword. While it allows them to play in the current high def market their ability to innovate in their products is limited by the closed technology. This makes it hard for them to compete with Sony.

– The upcoming DVD upscaling technology helps DVD to hold its dominant position in the market until the dynamics of the market shift more into Toshiba’s favour.

DVD has not been replaced yet, and for Sony to capatalise on their current good position they will need to radically open up their technology to other companies. If they do not other standards will continue to be put forward and the one that provides the best PC data storage experience will eventually dominate the market. Sony does not have a good history of doing this. This move may not be as bone-headed as it looks.