As we tried pointing out yesterday twice (once in the report, again in an update), Toshiba has made no (zip, zero, nada) official announcements about killing off HD DVD. It had been widely reported or "blogged" that HD DVD was officially dead, but that simply isn't true.
Today, Toshiba maintained its public face, which since Friday has emphasized that the company is considering its options. Speaking to the BBC, a spokesperson from Toshiba today said, "Toshiba has not made any announcement or decision. We are currently assessing our business strategies, but nothing has been decided at the moment." Toshiba isn't talking to many people on the record, but that's okay, because we've got sources.
We reported yesterday that Toshiba will make the death of HD DVD official in a matter of days, only after it has plans for a shutdown that will please investors and partners. This comes to us from a source close to the HD DVD camp, who also maintains that Toshiba was preparing for this day even before Netflix and Wal-Mart publicly disavowed their interest in the format.
What's there to think about?
Some of the readers who wrote me yesterday to insist that the decision was "official" asked, in paraphrase, "What's there even to think about?" That's a good question, so here's what I know based on conversations with sources close to and in the HD DVD camp.
This is a slow moving train wreck. Despite switched allegiances, intrigue, and the appearance of heavy competition between the HD DVD and Blu-ray formats, neither has grown markedly fast. So-and-so outpaced such-and-such by 30% doesn't mean much when you've only sold 100 widgets. Remember that analysts aren't expecting most homes to have HD DVD or Blu-ray players until sometime after 2010. If HD DVD is a train wreck, it's a very, very slow moving one and Toshiba could push on for many, many more months without necessarily giving up a lot of ground in units sold. But it would be a wasted effort if the goal was to see HD DVD succeed, and that effort is considerably more difficult when you have companies bailing left and right.
If the goal of the effort is to stifle Blu-ray, forget about it. Blu-ray has seen a strong uptick since CES, and that's not likely to stop on account of anything HD DVD does, and Toshiba knows this.
In this very slowly developing business, Toshiba could switch to a "milk it" strategy aimed at recouping as much loss as possible by focusing on moving existing product. We believe that before Netflix and Wal-Mart dropped the hammer on HD DVD, that this was effectively the plan: design no new players, shut down the recorder business, slash prices on existing stock, and stay in the market for several months. Slowly wind things down.
What last week's unraveling did was effectively make it impossible for HD DVD to be taken seriously anymore as a next-gen optical format. A "milk it" strategy now looks like a complete waste of time, but Toshiba could still go that route. I've heard some rumblings that Toshiba might also try to focus on HD DVD as a data storage medium, but Blu-ray should have that wrapped up nicely, too, on account of scale. There's really nowhere to go except the exit, and there's little reason to walk instead of run that we are aware of. At the same time, our sources are quite consumer-facing (as opposed to working with guys who own factories, for instance), so there's undoubtedly other wrinkles to this story.
If you were Toshiba, what would you do? Sell what you can and recoup some losses, or cut the cord and get back to focusing on other aspects of the business?
HD DVD death still not official; what they're mulling
HD DVD death still not official; what they're mulling
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