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EPTE Newsletter from Japan - Toshiba Powers Off Its HD DVD Video Format

Reports from Japanese media outlets last week announcing Toshiba's withdrawal from the HD-DVD business came as no surprise since most major retailers decided to carry the Blu-Ray technology exclusively.  The question wasn't "if" they would pull the plug, but "when" they would pull the plug on HD-DVD.

The battle over the next generation DVD began two years ago when major electronics companies could not decide the industry standard.  Toshiba and the Sony/Panasonic Group offered two different formats and consumers could choose either one.  Toshiba believed its "HD-DVD System" would be the most preferred product for consumers because of its lower cost even though it had limited capacities.  Sony/Panasonic co-developed their "Blu-Ray DVD system" targeting the high definition TV users that offered higher performance but carried a higher retail price.  Both tried to organize member companies to make their systems an industry standard. 

Unfortunately for Toshiba, the consumer's choice was very clear.  Toshiba waged a good war, releasing products earlier than their competitors, and keeping the retail price lower; however, the Blu-Ray Group continuously grew market share.  Sales of Blu-Ray hardware systems during the Christmas holiday were overwhelming compared to the HD-DVD systems.  Toshiba captured only a 5% market share in Japan, and recently decided to slash its retail in half in the American market.  Sales did spike with the price reduction; however, Toshiba's share remained less than 30% as most consumers purchased the Blu-Ray systems.

A similar battle was waged during the 1980's in the home video tape systems between Sony (Beta Max) and the Panasonic Group (VHS).  The documentation within technological history books provides a quick historical summary and reads that Sony's Beta Max format was the leading technology because of its experience within the professional VCR camera market.  Sony disclosed the basic technology to Panasonic in an effort to make its system the industry standard.  They were hoping that Panasonic would use their format for video tape products. Panasonic did not have advanced technologies in that era, but an R&D team from one of its subsidiaries (JVC) developed another system called VHS, and Panasonic chose VHS over Beta Max as the standard for its video tape systems. The format war began and both companies began marketing to other companies within the industry to become allies.

In the early stages of the contest, there was no clear cut leader because each group had the same number of members.  Consumers from the Beta Max camp were extreme and preferred this format because of its superior performance, but most consumers were not performance driven but more cost driven.  Panasonic's strategy was aimed towards this main stream and they tried to capture more electronics manufacturers and software companies to adopt the VHS format and become members of this standard. The strategy was successful. Once a few companies moved to VHS from Beta Max due to the marketing approaches of Panasonic, the snowball rolling downhill and became bigger and bigger.  Soon, Sony was the only manufacturing member of the Beta Max group, and had to accept the VHS format as the standard for the industry. But, Sony continued to produce Beta Max products and their components for the convenience to a small loyal niche of customers, and only recently terminated the production of Beta Max products.

What will happen to Toshiba and the other companies who were members of the HD-DVD format?   Fortunately (or not) Toshiba did not sell many products, so the repercussions should be minimal.  Toshiba did not reveal any future plans with developing DVD products using the Blu-ray technology, and stands to loose more than a half billion dollars (US) from the HD-DVD business. 

The surrendering from Toshiba could be good news for customers and the industry.  Many consumers sat on the sidelines, unwilling to part with any money on a product that may become obsolete.  Now, consumers have a clear option for their DVD systems, and demand should dramatically increase, and spread amongst part suppliers, circuit board manufacturers and material vendors.   The suppliers can now aim their sites on the real major DVD manufactures and begin meet and greets with their contacts to secure new business.

The companies who adopted Toshiba's HD-DVD format could suffer some short term bleeding since they cannot quickly change direction.  One Japanese media reported that Microsoft could be one of these victims since their game console (Xbox 360) works only with HD-DVD format. 

Dominique K. Numakura

DKN Research, www.dknresearch.com

Headlines of the week

(Please contact haverhill@dknreseach.comfor further information of the news.)

1.      Nikko Metal (Major non-iron metal supplier in Japan) 2/18

Will invest 2~300 million yens to increase the manufacturing capacity of rolling process of copper foils in China.

2.      Afit (Equipment vendor in Japan) 2/15

Has demonstrated a new laser-printing process of metal wiring and micro bump building on printed circuit boards.

3.      Gore Tex (Specialty cable supplier in Japan) 2/18

Has developed a new flexible circuit with reflection films as the substrate of LED modules.

4.      Noritake (Ceramic material supplier) 2/19

Has commercialized a new series of printing pastes for the manufacturing of solar cell devices.

5.      Du Pont (Major chemical company) 2/18

Has developed a new thick film material to build electrodes of solar cell devices.

6.      Tokyo Electron (Semiconductor equipment vendor in Japan) 2/18

Has founded a new joint venture with Sharp for the business of thin film based solar cell devices.

7.      Nihon Denshi (Equipment manufacturer in Japan) 2/18

Has started the shipment of the electron beam emission device for the silicon purification process of solar cell devices.

8.      Sony (Major electronics company in Japan) 2/20

Will invest 22 billion yens to establish the manufacturing process of the large size organic EL display panels.

9.      Micro Tech (Screen printing machine vendor in Japan) 2/20

Will build a new plant of screen printing machines to satisfy the booming demands of manufacturing process of PDP devices.

10.  Sharp (Major electronics company in Japan) 2/20

Has developed the smallest packaging for the RF tuning momdule device. Size: 5.9 x 5.9 x 0.9 mm.

11.  Fuji Film (Camera and photo film supplier in Japan) 2/21

Will invest 6.5 billion yens to build a new manufacturing plant of WV Film (Wide View Film) for LCD panels. Capacity will be 115 million sq. meters per year.

12.  Hitachi Maxcel (Memory material supplier in Japan) 2/22

Will continue the supply of the discs for the current customers of Toshiba's HD-DVD equipment.

Interesting literatures about the packaging industry

Articles of DKN Research

1. New "Screen Printing for High-Density Flexible Electronics", Robert Turunen, Masafumi Nakayama and Dominique Numakura, Printed Circuit FAB, October, 2007, http://pcdandm.com/cms/content/view/3846/95/

2. New "Total Process Solution for the High-Density Multi-layer Flexible Printable Electronic Circuits", (Japanese only) Dominique Numakura, Denshi Zairyo, October, 2007

3.New "The latest electronics package, Part XXXI, Cellular Phones", Dominique Numakura, Electronics Packaging Technology, October, 2007 

4. New "Coombs' Printed Circuits Handbook, 6th Edition, Part 15-Flexible Circuits", Dominique Numakura, McGraw Hill, New York, September, 2007

5. New "DKN Research Develops Film Base Connector", Circuits Assembly, September, 2007.

6. "Flexible Circuit Materials", (Japanese only) Dominique Numakura, Denshi Zairyo, April, 2007

7. "Business Trends and Technology Trends of the HDI Flexible Circuits -

Roadmap for the Ultra High-Density Advanced Flexible Circuits", Dominique Numakura, KPCA, October 31, 2006

From the Major Industry Magazines

1. "WASTE NOT, WANT NOT WITH LEAN SIX SIGMA", SAMUEL PONCE, CircuiTree, February, 2008.

2. "Embedded Active Components for High-Reliability Products", Jim D. Raby, Circuits Assembly, January,  2008.

3. "Inside Reflow", Gail Flower, SMT, January, 2008

4. "OPTOELECTRONICS Comes of Age", Bruce L. Booth and Jack Fisher, Printed Circuit FAB, February, 2008.

5. "The Thermal CPB -An Approach to Thermal and Power Management-", Paul A. Magrill, Advanced Packaging, January/February, 2008

7. "Under the Hood, Efficiency vs. Speed", presented by EE Times and Techonline, October 8, 2007