Toshiba: Life After HD DVD

Here is a WSJ interview with the CEO of Toshiba (TOSBF.PK) discussing the recent demise of HD DVD and the company’s plans for the future. It appears that Warner Brothers’ decision to drop HD DVD in favor of Blu-ray was the catalyst behind Toshiba’s decision to pull the plug on its HD DVD business. The decisions by retailers and content producers around HD DVD are an indication of both parties' strong dislike of format wars; in my opinion 90% of the impetus behind a format war is hardware manufacturer ego than anything else.

While I understand the need for manufacturers to push their own approach to a problem or to give consumers multiple choices, there is definitely something to be said for more manufacturer collaboration, open standards, compatibility between technologies, etc. In many ways, the HD DVD vs. Blu-ray format war was entirely unnecessary.

Going back to Toshiba’s future for a second, some quick thoughts:

1. Go ahead and license Blu-ray technology from Sony (SNE) and start making Blu-ray players. If you want to build your consumer electronics business it would be foolish for you to not offer consumers the dominant High Definition DVD Format.
2. Most electronics retailers have demo rooms that showcase the best consumer electronics gear they have to offer. In these rooms you’ll find speakers, receivers, complete home theater systems, TVs, amplifiers, DVD players, etc, etc. These rooms establish a “covet factor” as even if a consumer can’t afford it he/she wants gadgets from these manufacturers, and it often leads them to purchase the manufacturer’s lower priced products. If Toshiba wants to become a major player in consumer electronics, they need to establish a foothold in those demonstration rooms.
3. Building on the above, Toshiba should create a line of A/V receivers, speakers, surround sound systems, etc, which can go head to head with companies like Denon, Onkyo and Yamaha. If Toshiba is going to become a major player in consumer electronics, they need to start competing outside of their comfort zone of televisions, laptops and standard DVD players.
4. They need to improve their current HDTV designs so they’re on par with Samsung, Sony, Panasonic and Pioneer.

In the past, Toshiba has shown itself capable of producing products that received top rankings from audiophiles around the world (and we’re a picky lot to be sure). If Toshiba can please this market, they can definitely produce a complete line of products to please the mainstream electronics consumer. Toshiba can’t turn itself into a major player in consumer electronics via just producing PCs, DVD players and TVs; instead they need to start competing with companies that straddle the worlds of high-end and mid-end electronics. Only then will they truly establish the Toshiba brand as a top A/V gear manufacturer.

Disclosure: At the time of publishing the author didn’t own a position in Toshiba.

Comments

[Paul Woofer...:]

I'd really love to buy a Toshiba Blu-ray machine that works as nicely as my HD-A2. But...

"Most electronics retailers have demo rooms that showcase the best consumer electronics gear they have to offer."

I wish that were true in my area. The choices here are Best Buy and Circuit City where the TVs run continuous demo loops intended to dazzle you rather than let you judge picture quality, and you can't hear yourself think let alone evaluate loudspeakers.

2008 Mar 12 11:49 AM