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China: Sino HD DVD May Be 'Perilous' to Global Format

In the ongoing battle with Sony over dueling DVD formats, Toshiba may have adopted a "potentially perilous strategy" by encouraging low-cost Chinese competitors to crank out players using China's own unique standard for HD-DVD, according to The New York Times.

China recently announced it was developing its own format, in effect, based largely on the HD DVD format, not Blu-ray. A high Chinese official was quoted in the official Chinese press as saying its version was scheduled to be put on the market inside China before the end of 2007. Although the Sino format reportedly would follow the lead of the emerging HD-DVD standard, it would not be compatible with HD DVD appliances outside the country of 1.3 billion people.

According to the Times, the recent tactic of Toshiba allegedly courting Chinese disc makers had up until now been taboo in Japan. Manufacturers like Sony have usually attempted to delay their proprietary technology from being melded into cheaper, mass-produced versions of the original product. Today, China produces an impressive myriad of products (some of high quality) for global distribution, including an exhaustive amount of electronics goods.

The Times contends that in an attempt to thwart Sony, "Toshiba has reached a Faustian bargain with Chinese manufacturers. By making its technology available to them, Toshiba hopes to get cheaper HD DVD players in the stores months ahead of Sony, Panasonic, Samsung and other Blu-ray companies. This would help Toshiba outmaneuver Sony."

The publication also notes that Toshiba and others are well aware that virtually all standard DVD players soon became a cheaper mass-market item in the United States and elsewhere after lower-priced Made in China models began arriving to large discount chains, notably Wal-Mart (whose orders for goods have created entire towns within China).

But Toshiba encouraging the Chinese to, in effect, bring down new-generation DVD prices could be risky, the paper said. Toshiba, too, makes DVD players and could be competing against its own actions. And the company may have a harder time regaining lost financial capital from its huge investment in helping developing the HD DVD format, to begin with.

The Chinese, the newspaper notes, also have a reputation for not always paying Western-style licensing and royalty fees.