Wars of all sorts are a costly matter. Countries engaged in
war have to divert many of their resources away from usual spending towards the
effort. While the companies behind the high-definition format war didn’t have
as much at stake as traditional warfare, there are still heavy losses
associated with losing.
Toshiba officially surrendered in the high-definition
optical format war on February 19, 2008. As the only major hardware
manufacturer of HD DVD players, Toshiba stood the most to gain if its format
proved victorious, but ultimately lost out to the format backed by Sony,
Panasonic, Samsung and others.
The losses incurred by the exit from the HD DVD business
will cost Toshiba 100 billion yen ($986 million) on its yearly report, according
to the Nikkei
business weekly. Toshiba is also expected to post a 250 billion yen ($2.49
billion) loss, falling short of its business outlook.
The fall of HD DVD was a highly undesirable outcome for
Toshiba, but the Japanese electronics maker said that it had to get out of the
business to cut its losses. “One has to take calculated risks in business, but
it's also important to switch gears immediately if you think your decision was
wrong. We were doing this to win, and if we weren't going to win then we had to
pull out, especially since consumers were already asking for a single standard,”
said Toshiba president and CEO Atsutoshi
Nishida in an interview.
Regarding the loss of HD DVD from the company portfolio,
Nishida said, “It was just one avenue of growth. It was one of 45 strategic
business units that we have. This just means we now have 44.”
Although the loss is significant, Toshiba is diversified well
enough into other electronics businesses, such as televisions and chip
production, to stay afloat. Rather than switching over to Blu-ray Disc,
Toshiba said that it would continue to push its standard DVD upconversion technology.
“If you watch standard DVDs on our players, the images are
of very high quality because they include an "upconverting" feature.
And we're going to improve this even more, so that consumers won't be able to
tell the difference from HD DVD images,” Nishida said. “The players would be
much cheaper than Blu-ray players too. Next-generation DVD players are in a
much weaker position than when standard DVD players were first introduced.”