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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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By MagicJoe77 on 2/24/2008 2:45:32 AM , Rating: 2
After all this discussion, everyone seems to be picking the gaming console winner in this business decision. Despite the fact that this article has little to do about the actual 3rd Gen Systems. This article is about business relations and Toshiba making a money move. The gaming console race is still on and no victor has been awarded a crown, as there will likely be no real crown awarded. Each system has its benefits and niches that attract customers. Unlike past Gaming wars (which were more based on games rather than console capabilities), The 3rd Gen Systems have different hardware and software differences that make this an inconclusive race.

The PS3, as many have pointed out, has the HD optical Drive for Blue Ray, making is sell as both a Gaming console and Blue Ray player. Past that the system specs parallel X-Box 360.

X-Box 360 has a huge advantage on online gaming capabilities. X-Box Live works extremely well and offers content and gaming experience that is not available in the other systems. To further this (pushed to the public in the same timeframe that HD DVD died) MS is now going to allow amateur game programmers to make new games for X-Box 360 and post these on X-Box Live.

Wii’s ability to interact with the gamers’ motions will place it in a category of its own. This combined with its very competitive price will make this system great as a stand alone gaming system.

Overall this might have some impact in the gaming war, but the impacts will be more indirect. X-Box 360 Owners never purchased the system for its external 200$ HD-DVD drive, Nor did any PS3 owners purchase a PS3 for its limited online capabilities… and Wii … well when people buy a Wii, they know what they are getting. So the fact that now PS3 will be the only console that has a HD Drive will make little impact on the market overall. (HD movies are not as large of an industry as people make them, as players cost $150+ over standard DVD players, and most people aside from PS3 owners are not willing to change until that price and the number of movie titles becomes more competitive)




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