SONY and TOSHIBA to share a 40% and 60% share on Cell production

This is is to dispel the myth that SONY has sold off Cell to Toshiba. In reality SONY has got into a joint venture with TOSHIBA on CELL production .

Here is what the article said :-

"While the ownership of the asset would go to Toshiba, Sony and its gaming unit, Sony Computer Entertainment, would jointly participate in the production process as a minority shareholder of 40% in a new joint venture to be set up in April with Toshiba, which would take the remaining 60%. "

[EZCheez]

It's funny though that Toshiba will be assisting in Sony selling more PS3's (blu-ray players) at better prices.

[nasim]

AMAZON is indicative of BD sales.

recently the sales of BD due to a 2 for 1 promotion has jumped 200%

BD is now beating HD DVD 4:1 in NA

Transformer alone couldnt do anything

www.eproductwars.com/dvd

BD FTW

BTW here is what the BD :HD DVD look like at the moment
Statistic Blu-ray HD DVD

Salesrank of top 10 products:

35.8 321.9

Salesrank of top 25 products:

77.68 716.44

Salesrank of top 100 products:

973.12 3626.39

a lead of 4:1 at the moment for BD

[bdwins]

Since Toshiba/Sony/IBM all co-developed the CELL processor, this isnt going to change a thing.

[EZCheez]

Not true. If it didn't change anything then this deal never would have happened. Also, another thing that has changed is the owner of about $1 billion (approximately) involved in this deal.

[cuco33]

nasim, why are you talking about sales when the topic at hand is about CELL production?!?!?

You define troll the max. I won't even get into it and your made up 'facts'

[Skerj]

Can we please stop the duplicate stories putting any other kind of spin on this topic from now on?

[AllanWakker]

So much for that FUD.

[P4KY B]

.

[PimpHandHappy]

the success of the Wii didnt force Sony to sell off the cell. This is good news for anyone that wants a blueray player.

PS3 120GB for $300 by the end of 08

[PopEmUp]

This is great things for both side especial for sony to reduce the cost of producing the cell and toshiba to upgrade their own technology to compete with intel and samsung

[kn]

Semi Fab facilities are horrendously expensive to build and maintain. Sony pulled it's cash out of the fab by selling the facilities but will continue to benefit from the Intellectual property they own part of in the Cell processor.

[PopEmUp]

I would not be surprise there will be another price cut by march 08, simply because Sony partnership with Toshiba has given sony to reduce the cost from the cell and will let them to cut the price down of the ps3 price from both model (40gb and 60gb/80gb0, not just that the reduce cost of manufacture from the FCC.

I think the price cut can go even further by July 08 where it's will be roughly between $250 - $350 for 40gb model in the us, therefore the 80gb will be between $350 - $450, if this ps3 price hasn't cut by july/aug it will definitely be issued before Christmas 08.

If this were state out to be true with PS3 big title coming 08, and with this sort of price range for the PS3, I would think it will boost the sale of the PS3 dramatically, if not 3x the sales of this year it would be at lease 2x the sales of this years and I will guarantee this will force the Wii to have a price cut as well as PS3 main rival x-box 360, where they'll definitely be force to have a price cut to be able to compete with the like of the Wii and PS3. But if the price of Ps3 this close to it's competitors I think Ps3 has an edge over them with it solid title in 08 and stable hardware, they will have a chance to take the number 1 spot again

[kewlkat007]

"While it is planning to sink more money into research and development to reclaim technical leadership, exciting new growth areas seem far off, and it will now have to rely on Toshiba, a competitor on the consumer electronics front, for future generations of microprocessors for its games consoles. "

* The fact that they are competing on one end of technology, now Sony will rely on Toshiba on the other end of the same product.

Like this guy put it:
----------------------------- ------------------------------ - ------------
"In the future Sony will tell Toshiba what they want them to manufacture and Toshiba will set a price and handle the manufacturing. It doesn't make sense to do this in the long-term. The cost of owning a plant to manufacture millions and millions of chips is less than the cost of going to someone else for it. But it would generate some quick revenue in the short-term.

I don't like this because Sony is generally known for extremely high quality tech hardware. Toshiba just might reduce quality to save cost and gain more profit. Toshiba isn't terrible in quality or anything, but Sony is definitely top-dog in that regard."
----------------------------- ------------------------------ - -----------

a. So now that they are closer partners, this will be interesting how the format war go. Business is Business I'm sure and War is War.

b. Seems like Sony is really hurting in the financial sector and trying to cut cost. They also made a deal with Samsung to produce their current generation HDTVs out of Samsungs Plant,

1. So on a bigger scale of thing, what is happening to Sony as the HARDWARE MANUFACTURER?? Now they are OUTSOURCING the production of their their biggest money makers. What does that mean?

2. On the smaller scale like "PopEmUp" stated will this cut of manufactoring cost cut the PS3's price even more?

[Mu5afir]

Sony wasn't the ONLY producer of Cell chips. There is another pretty famous company, you might know them. They go by the name of "IBM" they are also producing the cell chip. Sony still has a 40% share of the factory, that means they make profit on every Cell produced, plus they also make a profit on every Cell chip soled to retailers.

Selling the factory, doesn't mean they sold the rights to producing the chip. It simply means they are no longer going to have to invest money on upkeeping a factory, and producing a new technology.

Toshiba has very little choice when it comes to setting the price of the chip. Since they must sell it to Sony, or they can't sell it to anyone else. 40% is a big number, just because it's not 60% doesn't mean anything in the business world. ;)

60% means you pay for labor, 40% means I make the profits.

[ARBitrator]

What's strange to me is that Sony has touted the cell and being the new best thing since sliced bread. And then turn around and sell themselves into minority shareholder for the technology. One would think such a great product would be an imminent cash cow.

What could have possibly made sony do that.

[kewlkat007]

from this POV. I do not know how much money Sony has lost in their games division but Sony as it looks like now is trying to re-invent itself. Not just with the console division but their whole business.

One of the main reasons have been the "competition" has caught up. There are a lot of companies now giving Sony a run for their money, in different markets.

a. Samsung(Produces sony's XBR line)
b. Toshiba(Now will produce Cell technology as well as RSX)
c. LG(Come on strong withing the past years)
d. Nokia(king of phones, as well as Samsung)
e. Nintendo(we all know)
f. Microsoft(we all know)

Like stated Sony is going back to spending more money on research and technology rather then putting out the operating cost of factories and making it's own hardware.

I see this a good thing in the short-run as it will free up some money, but in the long run outsourcing will cost Sony more money. Now as whole and Sony's current stand in the technology world, I think it's a good Idea to go back and rethink things. Not just for PS3 but all there other divisions.

A sure signs of COMPETITION and CHANGE. "Research Technology Development" is what they wanna focus on and they are right.

Just as you can ask yourself or maybe Sony asked themselves, Are we Growing as a company or Have we PEAKED?

[AllanWakker]

"What's strange to me is that Sony has..."

snip inane ramblings

Did you even bother to spend two minutes to learn about the relationship between Sony,IBM, and Toshiba?

Or even bother to learn about which of the three members are at what stage and what capacity at the various process techs for the various Cell chips?

Or even bother to even read any of the actual news stories that describe what Sony and Toshiba are agreeing to?

Obviously not.

[fjtorres]

They aren't selling off entire businesses but they *are* selling major (controlling) chunks to raise cash to keep their operations going.
Things are tough in the TV business, the slow PS3 launch, and the capital-intensive nature of the semiconductor business are the reason why they are getting out of semi-conductors.

These are short-term tactical moves with long-term consequences:

"The sale allows Sony to pass on the heavy cost of microprocessor development to Toshiba, Japan’s largest microchip maker. It could possibly lower Sony's procurement costs for Cell chips if Toshiba can reap production efficiencies from commercializing the chips in a broader range of applications."

Big "if" that one.

"The market has been concerned about Sony’s growth prospects over the longer term beyond its recent obsession with asset sales and cost cutting. The sale of Cell follows after it sold part of Sony Financial last week, bringing the unit public in a 320 billion yen ($2.74 billion) share sale."

"While it is planning to sink more money into research and development to reclaim technical leadership, exciting new growth areas seem far off, and it will now have to rely on Toshiba, a competitor on the consumer electronics front, for future generations of microprocessors for its games consoles."

All this from the linked article.

Whatever the percentages of the businesses sold, this isn't a move done out of corporate strength, guys. These are moves to shore up short-term corporate weaknesses (cash-flow) at the expense of long-term corporate assets. They just drummed up $3.5 billion worth of cash. That's a lot of money. So the question is why sell off even part of the Cell manufacturing (much less control of it) if they had already raised $2.7 billion? Because they need even more.
Something is soaking up cash like there is no tomorrow.

Its not clear what but Sony as a company is shrinking before our very eyes; less facilities, less employees, less sales in several key markets. And it isn't just PS3 that's withering them away; its consumer electronics as a whole; TVs, stereos, portable electronics. Apple stealing the portable music market hurt a lot. Their late shift to LCD hurt a lot and the LCD market's adoption of PC-type merchant supply-chains and economics hurt a *whole lot*; more than the slow PS3 launch. In the US alone they went from number one LCD TV vendor in '06 to fourth in '07. Getting back to the top is going to mean price-cutting, which means less profit.
Sony is simply in too many businesses that aren't making money and, fighting too many wars, and they're looking to keep their head above water any way they can.
This isn't about the PS3 at all; its about corporate survival.
Not. Good.

[Mu5afir]

Companies sell of assets all the time, it doesn't mean the they are "weak" or can't afford to keep running. You all act like "MSNBC" never existed, before it was bought out by Universal. I am assuming you all agree Microsoft does have a lot of money, right? That's what I thought.

Sony is doing what all companies do, restructuring it's business to make more profit. Sony is the #2 best electronic retailer in the world for a reason. Making companies public, or selling of shares isn't being "desperate".

[fjtorres]

First because Ms divested themselves of MSNBC the cable channel but not the web site; they still co-own that. The cable channel was not a fit with MSN but MSNBC is. It wasn't that they needed the money but they didn't have the expertise to (help) run the channel and knew it.
Second, MS also sold off Expedia. Same reason. It wasn't a fit with MSN *and* it was worth more as a separate entity.
Ditto with the recent Bungie divestiture.
See, those were all moves to maximize *long term* value and profits.
Not money-raising drives (cause MS as a company has never been short of cash; one guideline Jon Shirley put in place for MS 20 years ago was that MS should allways have enough cash on hand to survive one whole year without a single cent in sales.)
So MS is not a good business to compare Sony to; they are in a high-margin business--software--while Sony is in a low-margin business--hardware. Plus MS is making money and Sony is being squeezed.
Like I said, the issue is not PS3.
Or at least not PS3 alone.
Sony is simply fighting too many expensive wars and the cash-flow is tight.
They need cash to stay in the wars and that is coming from selling off parts of the company.
No great danger. Yet.
But if they don't start *winning* some of these wars...

[kewlkat007]

"Sony is the #2 best electronic retailer in the world for a reason."

Bro that sentence does not make any sense...Sony doesn't have stores to sell it's own products.

Like I stated above if you meant "Manufacturer" well this news and as well as what I posted Sony is not manufacturing some of their best hardware themselves. Not sure what you mean by that.

Like I stated earlier a lot of other electronic makers have caught up to Sony withing the last 5 years and I only posted some up above. Sony is trying to cut cost but if you look on how they are doing it personally it does not benefit them in the long run.

What's alarming is not that Companies sell shares and assets all the time, yes while that is common, it's more of their sign of weakness, not being able to produce a lot of their hardware now. Being the leader for a while that is what's so surprising and not just with the PS3 parts but with other products aswell.

Either way this might not hurt Sony in the short run but in the long run it might come back to haunt them, but for now they will be saving some money but who knows in the future with the development of the cell chip how big that 60% might be. so yeah not a move that signals, your the TOP dog. Same kind of deal with SAMSUNG producing Sony's HDTVs. What's next?

[BlazinEurasian]

Most large companies have joint interest holdings. It reduces risk (and potential profit). It is a conservative move, but I believe a good one. Toshiba may have made Sony an offer it couldn't resist.

[mastershake100]

someone said the tv business is a tough one, sony made like over a billion off of bravias

[darthv72]

Toshiba and Sony as well as IBM develop the cell. Sony was handling the manufacturing of the cell for the ps3 when the design was finished. Sony can't afford to keep that up so in outsourcing the manufacturing to toshiba it save them some big $$. Toshiba is now in an interesting position because it isnt just Sony that holds a stake in the cell. Toshiba was thinking about using the chip in a line of notebooks as was Sony for some of their Vaio's.

toshiba could farm out the chip to be used as a low cost cpu for their hddvd players for the newer generation of units coming out. Sony can't really say no nor can IBM because toshiba was a partner in the design to begin with. IBM couldnt care less where the chip is used so long as they get their share of the $$.

Sony wants the chip used in more than just the ps3. It wants the chip for smart TV's and other consumer electronics which would include newer generation of bluray players as well. So if a player comes out from both sony and toshiba using the cell chip then it may be one step closer to bridging the format gap.