Toshiba Supports PS3 after Relinquishing HD DVD

After conceding defeat in the high-definition DVD format war, Toshiba has decided to buy Sony’s Cell processor chip factory in western Japan for $835 million.

Though the plant will be bought by Toshiba, it will be run by a joint-venture co-owned by both Sony and Toshiba. The JV was announced in October 2007, part of Sony's plan to exit the costly chip business. Though talks of sale of the cell facilities were going on between Toshiba and Sony since October 2007 and even a tentative agreement was reached, the two companies continued to haggle about the price.

The JV is due to be incorporated on 1 April 2008. The chip factory currently produces Cell processors and RSX graphic chips - the GPU developed by Nvidia and, like Cell, used in the PlayStation 3.

Sony's partnership with Toshiba over the Cell chip is in stark contrast to the two firms' opposition over next-gen optical disc formats. After Warner, Best Buy, Walmart and Netflix decided to support Sony’s Blu-ray, the fate of HD DVD was sealed. Toshiba Corporation, the principle HD DVD developer, came out last week and officially surrendered to Blu-ray.

Toshiba, IBM and Sony were the principle developers of the Cell microprocessor, but Toshiba previously showed little interest in using the chip for any of its own projects. Sony uses the Cell broadband engine in its Playstation 3 consoles; IBM uses the Cell processor in high performance computing clusters. Toshiba has now decided to use the Cell in its upcoming products.

An interesting aspect of the move is that it indicates a clear shift by Toshiba to back the PS3. The PS3, which outsold Microsoft's Xbox 360 last month, previously had few ties to Toshiba. On the contrary, Toshiba has been Microsoft's number one ally in hardware manufacturing. Toshiba manufactures several components for the Xbox 360 like the HD DVD add-on, and the Microsoft Zune MP3 players.

Toshiba's flip-flop may have been in the cards for a while. Microsoft showed little remorse as HD DVD took second place to Blu-ray. Now the solidified PS3 venture between Sony and Toshiba indicates that Toshiba has switched to backing the PS3 almost exclusively, which is another victory for Sony.