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The 90nm Cell/B.E. package as found in the PlayStation 3, now to be manufactured by Toshiba.  (Source: DailyTech)
Sony gives Toshiba something in return for its troubles -- Japanese Cell chip plants for $835M

A new twist has emerged with the death of HD DVD.  After Warner, Best Buy, Walmart and Netflix jumped on the Blu bandwagon, the fate of HD DVD was already sealed.

Despite the grim news, the principal HD DVD developer, Toshiba Corporation, refused to initially comment on its plans for its HD DVD.  However, as many analysts predicted, Toshiba came out last week and officially surrendered to Blu-ray

Many saw Toshiba's willingness to give up on HD DVD as a logical business decision and perhaps an admission of Blu-ray's superiority.  However, there might be a little more to the story.  Reuters reports that on Wednesday Toshiba and Sony Corporation, one of Blu-ray's principal developers, agreed to a major business deal, reached just after Toshiba made its final HD DVD decision.

Sony agreed to sell it microchip processing facilities in western Japan for approximately $835M USD.  These facilities currently produce Cell processors and RSX graphic chips.  Toshiba will enter the joint venture with Sony on April 1, 2008.

Toshiba, IBM and Sony were the principal developers of the Cell microprocessor, but Toshiba previously showed little interest in using the chip for any of its own projects.  Sony touts the Cell broadband engine in its Playstation 3 consoles; IBM uses the Cell processor in high performance computing clusters.  Toshiba has vowed to now use the Cell in its upcoming products.

While Toshiba and Sony entered into talks back in October 2007 and reached a tentative agreement to sell the cell facilities, the two companies continued to haggle about the price.  Sony's concession of what is considered a favorable price for Toshiba will likely strike many following Toshiba's drop as HD DVD as more than a coincidence, and perhaps a sign of an informal agreement.

The other interesting aspect of the move is that it indicates a clear shift by Toshiba to back the PS3.  The PS3, which last month outsold Microsoft's Xbox 360, previously had few ties to the company; while Microsoft's number one ally in hardware manufacturing has always been Toshiba.  Toshiba manufacturers several components for the Xbox 360, including the HD DVD add-on, and the Microsoft Zune MP3 players.

Toshiba's flip-flop may have been in the cards for a while.  Microsoft showed little remose as HD DVD took second place to Blu-ray; a move Toshiba must have recognized from its American ally.  Now the solidified PS3 venture between Sony and Toshiba indicates that Toshiba now has switched to backing the PS3 almost exclusively, another victory for Sony.

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what does this change exactly
By agent2099 on 2/23/2008 7:43:58 PM , Rating: 3
"Toshiba's flip-flop may have been in the cards for a while. Microsoft showed little remose as HD DVD took second place to Blu-ray; a move Toshiba must have recognized from its American ally. Now the solidified PS3 venture between Sony and Toshiba indicates that Toshiba now has switched to backing the PS3 almost exclusively, another victory for Sony."

What does this mean exactly. How was Toshiba "backing" Microsoft before?

What has Microsoft lost as a result of Toshiba manufacturing chips for Sony?

RE: what does this change exactly
By rudolphna on 2/23/2008 8:12:09 PM , Rating: 2
In the end, the Wii will be the best selling console, several reasons.
2. More fun to play (ive used all 3 and the Wii is definetly the most fun)
3. More games (compared to the PS3)
4. Not everyone needs or wants HD

We have a hi def tv in our house, but we still have a Wii, a Gamecube, a PS2 (which frankly has crappy graphics in the game themselves, the Cut scenes are good)a N64) we dont even use the component cables, we use the standard RGB cables for 480i output. It looks great. The wii is the cheapest of the 3, and the revolutionary controller is very cool and fun to use.

RE: what does this change exactly
By BansheeX on 2/23/2008 9:06:01 PM , Rating: 4
2. Totally subjective, cumulative game score averages have shown the Wii to be abysmally low, and having played many of its games, I can attest to why many traditional gamers would be completely unimpressed with its current library.

3. Quantity of games means nothing, particularly when most of them are shovelware.

1 and 4 matter some, but you're missing the biggest reason that it will sell well, which is that Nintendo's console has been marketed to and appeals to non-gamers, which far outnumber traditional gamers and have far more buying power. They've made a control device that these people can understand and coupled them with sports activities that people know. It's also the ONLY option for the very young as no one is going to buy an expensive system comprised of mature-rated games for an eight your old. Those are two large demographics that Sony and MS are not trying to associate with.

RE: what does this change exactly
By jonrem on 2/23/2008 10:06:27 PM , Rating: 2
Absolutely correct. I bought one for Mario, Zelda, Metroid, and eventually SSB, but there's a big drop off in quality after the top-tier games. Too much junk.

RE: what does this change exactly
By Gastrian on 2/23/2008 8:24:48 PM , Rating: 2
And what rights does Toshiba have when it comes to selling on manufactured Cell chips? Are they restricted to selling to the companies Sony tell them they can sell to or do they have free reign and hence sell it to the likes of Microsoft.

Not sure if its just due to the internet crowd becoming more aware of such business politics but there seems to be a lot of news being over-glamourised.

Hands up how many people knew that Nintendo made money from UK PS2 sold in the chanel?

And where's the cufuffle over IBM, Intel, nVidia and ATI/AMD? AMD makes the GPU for both the Wii and Xbox360. nVidia and Intel both made parts for the original Xbox and "jumped ship" to MS's competitors this generation - nVidia makes the PS3's RSX and Intel launched the Core Duo in Macs. In the same light IBM went from Apple to MS as its processors went from Macs to the Xbox360. IBM not only makes the Wii and Xbox360 processors but is a partner of Sony in the Cell's creation.

Toshiba's purchase was simple business, the biggest selling HiDef player so far is the PS3. If both Sony and Toshiba continued the "HD-War" both companies would lose money selling their products at reduced prices. By buying the plants Toshiba has a contract with Sony that lasts at least as long as the PS3, then there's all the other products the Cell was meant to be a part of and each processor will be sold at a profit. Toshiba has bought itself a steady cashflow in a less volatile and risky market.

By ViperROhb34 on 2/24/2008 11:46:53 AM , Rating: 3
Lost ?

PS3 needs to outsell Xbox 360 by 85,000 units a month for the next 6.5 yrs just to break even !

Secondly, MS has plenty of fab plants making their CPU's and GPU's .. they don't need Toshiba to do that.

Lastly, how outdated with the PS3 look in 2010 when MS and Nintendo come out with new consoles ? Those consoles could also use BLuray - if it indeed survives.

Bluray was chosen solely because neither HD media was selling well.. Movie studios were set to lose millions if both formats failed..

right now Bluray sales account for about .4 of one percent of movie sales - not an impressive figure, but we'll have to see how much that changes in the next 2 yrs.. or you'll see an Xbox with a bluray player ..

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