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Matsushita President Puts Foot Down on DVD Standard

By Jennifer LeClaire
May 19, 2005 9:14 AM PT

The president of Matsushita Electric Industrial Co. put his foot down today, leaving it up to Toshiba to yield its position in discussions over a unified format for next-generation DVD technology.

Matsushita President Puts Foot Down on DVD Standard

Kunio Nakamura said his company -- and its partner Sony -- won't back down. The powerful duo supports Blu-ray. Toshiba supports HD-DVD, a newer DVD technology. Negotiations about which standard will prevail have seemingly all but stopped.

"The talks continue, they have not collapsed," Nakamura told a group of reporters in Tokyo. "But Matsushita and Sony have not changed their stance. We are waiting for Toshiba's decision."

Both sides -- which have lined up substantial hardware manufacturing and content provider support -- seem fixed on their own technology as the best solution. But leading industry observers to continue warning that we may be in store for "Beta vs. VHS II" that could stymie industry growth.

Standards Wars

Jupiter Research analyst Michael Gartenberg told TechNewsWorld Sony's recent announcement that PS3 will be a Blu-ray device just made it even more difficult for either side to back down.

"Each side has invested a lot in this battle," Gartenberg said. "They each understand the importance of controlling the standard in terms of royalties and in terms of driving technology advancements forward."

However, Gartenberg points to the recent battle in the next-generation audio disc market between DVD-Audio and Super Audio CDs as the potential downside to an extended battle: neither format has gained significant traction with customers.

Compromising for Dollars

Analysts said standards wars only serve to slow down the market. Mainstream consumers are prepared to wait for prices to come down and a standard that they can bet on before buying into a new product, according to Gartenberg.

Which format is best? While both sides make technical claims based on format superiority, storage and ease of transition, analysts said the best format will be the one that offers the most content and ships the most units to market.

Either format could be successful if consumers rallied around it, Gartenberg said.

"Format wars like this only create confusion in the marketplace because they slow down mainstream consumer acceptance," Gartenberg said. "But the stakes are so high for the winner that no one wants to back down. Obviously, both sides feel that they will ultimately be strong enough to carry the day and drive their standard to the de facto standard."

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