Toshiba after HD DVD: What lies ahead?

By now Toshiba's decision to no longer develop, manufacture, or market HD DVD players and recorders is public knowledge. What's next for the company, and for consumers who bought into the format it supported? A close look at Toshiba's press release reveals some answers.

Long-Term Impact

"We carefully assessed the long-term impact of continuing the so-called next-generation format war and concluded that a swift decision will best help the market develop," says Atsutoshi Nishida, Toshiba president and CEO.

There's irony here, for sure: After all, Toshiba forged ahead with its technology two years ago, at a time when a format war could have been averted before products went to market and consumers were dragged into the mess. Perhaps this is the company's way of apologizing for the whole debacle.

High-Def Lives

Nishida continues, "while we are disappointed for the company and more importantly, for the consumer, the real mass market opportunity for high definition content remains untapped."

That Toshiba still sees the market opportunity for high-definition content is no surprise. This is a company that makes HDTVs. What will you play on those enormous HDTV screens if not high-definition content?

But will Toshiba enter the Blu-ray Disc player market? It's doubtful. In part thanks to the format war, prices have deteriorated so quickly that the margins just aren't there. Plus, the market is fast moving toward commoditization. Give it another two years, and we'll see Blu-ray Disc players being sold for under US$200.

Beyond the Disc

At the same time Toshiba announced its withdrawal from HD DVD, the company said it would increase its focus on high-capacity NAND flash memory and small hard drives. Toshiba also said it would work on maximizing next-generation CPUs, visual processing, and wireless and encryption technologies.

Shortly after making its HD DVD announcement, Toshiba revealed that it has partnered with SanDisk to build a new flash memory chip factory; the companies will share the output from the factory. Toshiba is also launching another chip factory of its own for NAND flash memory.

If Toshiba could get costs down and capacities up on its portable hard drives, the company could pursue another market: high-definition recording to hard disk for DVR-like networked media players. Converged devices such as these could be attractive to network-savvy users who want everything networked throughout the home, including their high-definition content.

That said, Apple's foray into the field--Apple TV--didn't exactly get consumers humming. For Toshiba to make a go of it, the company would have to make its product easier to use and better than the solution that cable and satellite operators currently provide: high-def DVR boxes that require few cables. Toshiba could offer a premium high-definition DVR that also supports streaming media around the home network; years ago Toshiba had prototype designs for such a concept (sans the high-def). Toshiba has already dipped into media streaming with its Network NAVI interface introduced on the RD-XS54 DVD recorder a few years ago.

HDi: Does It Still Have a Future?

Toshiba says it intends to "maintain collaborative relations with the companies who joined with Toshiba in working to build up the HD DVD market, including Universal Studios, Paramount Pictures, and DreamWorks Animation and major Japanese and European content providers on the entertainment side, as well as leaders in the IT industry, including Microsoft, Intel, and HP. Toshiba will study possible collaboration with these companies for future business opportunities, utilizing the many assets generated through the development of HD DVD."

Translation: The company plans to maintain good relations with its current partners.

However, this may be an oblique reference to the HDi interactivity initiative Toshiba and Microsoft began in 2007, which involved expanding the advanced interactive layer used in HD DVD media authoring. As recently as late January Microsoft was pushing its HDi technology at the 2008 Sundance Film Festival. And Toshiba and Microsoft have revealed that the larger vision for HDi included a universe where multiple devices--including portable media players, servers, and content stored on the Internet--would use HDi to talk with one another.

It's quite possible that Toshiba plans to continue exploring HDi--assuming Microsoft plans to continue pursuing the technology in light of HD DVD's demise.