Monthly Archives: August 2009

Toshiba now officially Blu

August 10, 2009
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Toshiba on Monday officially confirmed last month’s rumor that it’s preparing to join the Blu-ray Disc ranks, issuing a one-paragraph statement saying it will roll out Blu-ray products, including set-top players and notebook drives “in the course of this year.”

“In light of recent growth in digital devices supporting the Blu-ray format, combined with market demand from consumers and retailers alike, Toshiba has decided to join the BDA (Blu-ray Disc Association),” the statement said.

blu-ray_disc_logoThat immediately led to speculationthat Apple will be next to join the Blu-ray camp, completing the format’s sweep of the field among electronics makers.

I can’t speak to Apple, but as I noted in a previous post, I think Toshiba’s new-found support for the format has more to do with Toshiba’s business than with Blu-ray.

Why? Because the electronics maker just wrapped up the worst fiscal year in its history, posting a record et loss of $3.5 billion for the year ended in March and things haven’t gotten better since then. The Consumer Electronics Assn. is forecasting total industry sales to be off nearly 8% this year and to turn around only gradually in 2010. About the only bright spot in the CEA forecast was Blu-ray players, which are expected to grow by 112% this year, to 6 million units.

Today’s announcement also comes on the eve of the CEDIA Expo custom installers’ show, which is scheduled to get under way in Atlanta on Sept. 9 and is an important event for CE makers. Installers these days generally like to include a Blu-ray player and their set ups and right now there’s a hole in Toshiba’s product line-up. That means it can’t sell installers complete home-theater packages and is likely losing high-end market share to manufacturers that do offer Blu-ray players. Though Toshiba said it has not decided whether to display its new Blu-ray players at CEDIA, it has at least alerted an important constituency that it is plugging the glaring hole in its product line.

The biggest reason to suspect today’s news is more about Toshiba’s business than about Blu-ray, though, is that Toshiba is still selling HD DVD players in China, under the China Blue High Definition (CBHD) banner.

Desperate times, desperate measures.

Scared hens in the Fox house

August 6, 2009
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Somewhere, Tom Freston is laughing.

murdochRemember when News Corp. was supposed to have figured out this New Media thing way better than the other media empires, and Sumner Redstone was firing Freston for letting Rupert Murdoch snare MySpace? These days, not so much. New Corp., in fact, appears to be getting a bit panicky over the whole New Media thing.

Yesterday, the company announced pretty ugly second-quarter earnings (fiscal Q4), low-lighted by a $403 million impairment charge against Fox Interactive Media, which consists primarily of MySpace, as well as a $228 million “restructuring” charge due mostly to layoffs as MySpace. That’s $631 million in charges for the same “prize” News Corp. snatched away from Viacom for $580 million in 2006.

In the earnings call, Murdoch declared that he intends to start charging people to read all News Corp. newspaper content online, from the Wall Street Journal  to the Page Three girls in the Sun, a sure sign that the company really doesn’t know what it’s doing online. Unless there’s some other strategy for leveraging the network economics of the Internet Murdoch hasn’t told us about yet, simply throwing up paywalls around everything isn’t a business plan. It’s taking your marbles and going home.page3girls

On the same call, newly appointed vice-chair and COO Chase Carey took a whack at Redbox, the $1 a night DVD rental kiosk outfit owned by Coinstar. “I think making our content available for $1 grossly undervalues it,” Carey said.

According to the Journal (sub. required, natch), Fox has told DVD wholesalers like Ingram Entertainment and VPD not to sell its movies to Redbox until 30 days after their initial release, the same anti-competitive-ish stunt Universal pulled earlier this year.

The fact that News Corp.’s No. 2 is spending his time worrying about dollar-a-night rentals tells you all you need to know about how far the studio is from figuring out to respond strategically to precipitously declining DVD sales.

If I were Carey (or Fox video head Mike Dunn) I’d be worrying about why Blu-ray, which Fox championed, hasn’t arrested the massive outflow of consumer dollars from the packaged media business. And I’d be focusing on how to structure my deal with Netflix before it finishes the job of remaking the online video-on-demand business into a non-transactional subscription business and Reed Hastings ends up with all the leverage, rather than risking litigation over my deal with Redbox. The DVD business is term-limited. Getting digital distribution right now will do a lot more for earnings in the long run than bashing a few kiosks to make yourself feel good.

Petulance is not a strategy.

Sony's long-shot e-book strategy (and a shameless plug)

August 5, 2009
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Sony formally unveiled two new e-book readers today, slightly ahead of schedule because details of the announcement began to leak on the web. The big news: one of the two models is priced at $199, a hundred bucks cheaper than the least-expensive Kindle (the fancier Sony device goes for $299). Clearly, Sony’s strategy is to position its Reader as a more mass-market friendly device by getting under the Kindle in price.

“They are not trying to beat Amazon at its own game—they are trying to redefine the terms of the game,” Forrester Research analyst Sarah Rotman Epps told the Wall Street Journal. ”Where Amazon went bigger with the Kindle DX, they’re going smaller.”

sony readerFair enough, but trying to compete on price in the e-reader market is likely to prove a tough nut. First, Sony isn’t the only one trying to work the low-end side of the street. UK-based Interead introduced its Cool-er e-reader earlier this year is also playing the price game.

The bigger problem for Sony, though, is the cost of manufacturing e-book readers. It ain’t cheap.

As I detailed in a new report on the e-book market that was released yesterday byGigaOm Pro (subscription required), the essential technology in e-book readers is the electrophoretic electronic-paper display (EPD), which uses reflective electronic ink on a static background to produce the image, rather than electronic pixel elements on a backlit screen. That makes the experience of reading more like ordinary ink on paper and yields a huge savings in power consumption.

According to a tear-down analysis by iSuppli Corp., the EPD is by far the most expensive item in Amazon’s $177 bill-of-materials for its $299 Kindle (Amazon claims the BOM is much higher than $177), at $60, followed by the wireless broadband module at $40. Read more »

Feels like old times

August 3, 2009
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Some news out of China last week laid a nostalgia trip on those of us who covered the long saga of the Blu-ray vs. HD DVD format war. According to a report in the Timesof London, a recently introduced high-def DVD format developed in China, called China Blue High Definition (CBHD), is already outselling Blu-ray in the Peoples’ Republic by a margin of three-to-one.

bluray-vs-hddvdThe Times called the development a “new format war” but it’s really a continuation of the same format war that had simply gone underground after Toshiba pulled the plug on HD DVD  in the West back in February 2008.

The roots of CBHD go back to 2005, when the Chinese government set out to “break the monopoly” of Western and Japanese companies on the technology underlying the DVD format by creating new intellectual property controlled by China to be used in a next-generation format.

In 2007, the DVD Forum fomally approved specificationsfor a “China-only” version of the HD DVD standard, which was to be based on the HD DVD physical specs developed by Toshiba and Chinese-developed audio and video codecs. Instead of MPEG 2, VC-1 and H.264, for instance, the Chinese format would support only the Advanced Video System (AVS) developed in China, saving Chinese manufacturers boat-loads in royalty payments to foreign technology owners. Read more »