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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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RE: Business is complex.
By hduser on 2/24/2008 4:39:10 PM , Rating: 2
I doubt if Microsoft would've changed from a built in DVD to HD DVD mid stream. Ultimately it would've alienated the original people who had bought the 360 if there were games to be released especially HD DVD. If it chose to wait for HD-DVD it wouldn't have gotten the lead that it enjoys right now and ultimately the 360 would've costed more. Ultimately Microsoft move to release the 360 ahead of PS3 was a double edge sword, less reliabilty, no inherent HD content but a good sales lead and lower price.

RE: Business is complex.
By Belard on 2/25/2008 1:52:11 PM , Rating: 2
I didn't think I said anything about MS building in a HD-DVD in midstream. But that MS still has to buy their drives from someone else like Toshiba HD-DVD or DVD.

Of course, the HD-DVD or HiDef side is only usable for watching movies, there is NO way to change this. No developer would/could work with it. The 360 would have been far more expensive than the PS3 (more so than it ever was)... so yes, MS went the better route for a console, not HiDef movies/largeformat disc medium for games. If I was MS, I would have done the same thing, but would have made a better design chassis - but since I'm not THAT greedy, I would have made it more customer friendly. $100 for a 20GB HD, $200 for the 120GB? Come on!?

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