Dialog: After HD DVD, whither Toshiba?

To the loser go the spoils?

CARMI LEVY, Senior Vice President, AR Communications: This would be an illustration of Toshiba's engineering and production prowess, to see whether Toshiba is, in fact, capable of triumphing from adversity. Sony showed that they could do it in the wake of the Betamax debacle, and obviously they've survived and thrived up until now. They've had their ups and downs, but certainly the company keeps investing in next-generation technologies, some of which succeed, some of which do not.

And I think that is an instructive lesson for Toshiba, as well as the fact that they did lose to Sony, which has been through this before. When you are a leading-edge consumer electronics company, not everything that you bring to market will stick. So I would hope that this experience does not negatively affect the culture within Toshiba, and does not incent or motivate Toshiba to become a conservative player in the market, to be less likely to take a chance on investing in an exciting new technology that could change the way we consume content or interact or be entertained.

This is the kind of thing that can radically change the DNA of a company, for better or for worse, if they let it. Certainly there's lessons that Toshiba needs to [take in]: You lost. Suck it up, figure a way out of it, recognize the silver lining in the loss, and move on. But don't let it force you into a corner for future battles, because you want to make sure you remain a player in this market, and the only way that you remain a player is by taking risks.

SCOTT FULTON, BetaNews: By doing that, does Toshiba now turn around and look at a five-year window into the future, and say, "Okay, now that we've killed our investment in HD DVD, we may have a surplus of R&D money, here. Let's invest in the fat pipe?"

CARMI LEVY: Absolutely. If I were Toshiba, that's exactly what I'd be looking at. I'd be looking at near-, medium-, and long-term strategies, and for the long-term...We now know that Sony is the victor in the disc-based battle, but we have no idea who the victors will be in the online battle that looms on the horizon, and whose shadow grows with every passing day. Right now, one of the silver linings for Toshiba -- there are many -- is that they're no longer saddled by their large R&D, production, and marketing effort, and those budget dollars can now be allocated elsewhere. And I would expect that at least some of those dollars will go into development of network-based, long-term content delivery and management technology.

Certainly Toshiba has shown in the past that it has the wherewithal to pull off something like this, and I would expect that they take the lessons learned from HD DVD and apply them to that next-generation battle that looms. If they play their cards right, they'll be right in the middle of that fight just like they were right in the middle of this one, only next time, they'll have the benefit of a little bit more experience -- some pretty hard experience.