After HD DVD Drop, Toshiba Spends $835M to Back PS3
February 23, 2008 12:46 PM
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The 90nm Cell/B.E. package as found in the PlayStation 3, now to be manufactured by Toshiba.
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.
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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RE: what does this change exactly
2/23/2008 8:24:48 PM
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.
"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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