Hi-Definition DVD War - Sony (SNE) and Toshiba (TOSBF) - by Manny Backus

[First Hour Trading]

Hi-Def DVD War - Sony (SNE) and Toshiba (TOSBF)
by Manny Backus

If you're like me, you've been waiting for a winner in the war between the two competing, incompatible standards for high definition DVD players. I've had my HD LCD panel for a while, and would love to watch hi-def DVDs on it. But I didn't want to blow bucks on a format that might disappear soon (remember the Sony Betamax VCR?).

The high definition DVD war is over. The Blu-Ray format (from Sony) won, after Toshiba gave up on their HD-DVD format. So now I can buy a hi-def DVD player with some confidence the format will be supported for a while. And the prices should start dropping, right?

Wrong. The reason that the standard DVD players became so insanely inexpensive (like $25 at Best Buy) is that the technology was licensed to manufacturers in China. They churned out millions of cheap players that soon glutted the market.

Don't expect that to happen again very soon. I read an interview with a guy from Sony in the New York Times who said that they aren't licensing the technology to any factories in China now or for the foreseeable future. He said you can expect a slow decline in prices (currently about $400 for a Sony player). Maybe by Christmas 2009 you can snag a Blu-Ray DVD player for $200. As for me, I don't think I can wait that long. In fact, I'll probably have a Blu-Ray player in my laptop or PC before I have one in my entertainment system.

Finally, how has the end of the war affected Sony (SNE) and Toshiba (TOSBF ) stock prices? Both peaked just after the war ended in late February, and have been on a slow decline ever since.

All the best,

Manny Backus
First Hour Trading

P.S. Find out the difference between the 3% of traders who make money consistently in the stock market and the rest at: First Hour Trading