Toshiba surrenders in format war

 

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By Reuters

Posted on 18 Feb 2008 at 08:13

Toshiba plans to give up on its HD DVD format, conceding defeat to Blu-ray, much to the delight of investors.

A source at Toshiba has confirmed an earlier report by Japanese public broadcaster NHK that it was getting ready to pull the plug.

"We have entered the final stage of planning to make our exit from the next generation DVD business," said the source, who asked not to be identified.

Toshiba shares jumped 6.3% as analysts praised its move to cut its losses, while Sony, whose technology is set to become the industry standard, rose 2.1%.

"It doesn't make sense for Toshiba to continue putting effort into this," says Koichi Ogawa, a chief portfolio manager at Daiwa SB Investments. "It needs to cut its losses and focus its resources on promising businesses."

Hollywood studios had initially split their alliances between the two camps, meaning only certain films would play on any one DVD machine.

The balance of power tipped decisively toward the Sony camp in January after the Warner Bros studio announced it would only release high-definition DVDs in Blu-ray format.

In the wake of the news, rumours have emerged that Microsoft is working on integrating Blu-ray into the Xbox 360.

Sources within the company claim that both an add-on Blu-ray optical drive and a version of the console with a built in Blu-ray drive are in production, according to SmartHouse.