Early adopters suffer as Toshiba bows out

Retailers and consumers lose out as Sony's Blu-ray wins the high-definition DVD battle, says market analyst, who highlights need to avoid incompatible formats.

The war between HD DVD and Blu-ray is over, with Sony's Blu-ray the victor, an outcome seen by some as beneficial to Toshiba but unfortunate for retailers and consumers.

Toshiba on Tuesday announced its decision to bow out of the high-definition format race against Blu-ray, saying it would cease the production and marketing of its HD DVD format players.

Carl Gressum, a senior analyst with Ovum, told ZDNet Asia that Toshiba's retail presence for DVD-based products has been "weak...in many markets", and that the company's hardware sales revenue has been "limited".

Gressum added that Toshiba's other products such as TVs, utilities and generators, are much more important to the company.

Goldman Sachs has said in reports that it expects Toshiba's decision to pull out to help the company cut losses and improve profitability by some US$370 million to US$460 million a year.

Gressum had said in another report that the price war between HD DVD and Blu-ray has caused the former--which retails at a lower price--to be a losing bet for Toshiba, which saw low revenue from low sales and the cheaper pricing.

An estimated 1 million people globally own HD DVD players, with a little over half in North America.

The company's president Atsutoshi Nishida told reporters Tuesday that the decisive moment in the battle came when Warner Bros. Entertainment decided in January to go exclusively Blu-ray for its high-definition titles.

Subsequently, Wal-Mart in the United States and other retailers dropped sales of HD DVD products.

According to Toshiba, shipments of HD DVD machines to retailers will be stopped by the end of March.

Gressum expects retailers to slash prices and offer rebates to clear existing stock, although it is "unlikely" that the company will recall stock due to cost.

"It will be up to end users to sort this out. Welcome to the world of early adopters," he said.

"This once again shows why incompatible and mutually exclusive formats should be avoided at all cost by the industry. It reduces profitability and delays customer adoption."