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The main force behind the Blu-ray disk format – Sony Corp. – and the head of HD DVD development – NEC Corp. – have concluded a memorandum of understanding (MOU) aiming to establish a joint venture company in the optical disc drive business. The new company, if formed, will aspire to become the leading company in the optical disc drive sector, the makers indicated.

“Optical disc drives are key components for a broad range of devices and we are strategically focusing our development resources in this sector. By teaming with NEC which has excellent technology in areas such as DVD drives, I believe we can work effectively to enhance our product lineup and quality on a global scale,” said Sony's president and electronics chief executive Ryoji Chubachi.

According to the MOU, Sony will hold a 55% stake in the new company while NEC’s stake will be 45%. Sony and NEC will make preparations to transfer their respective optical disc drive operations to the joint venture, targeting a business start on April 1, 2006. The Joint Venture will focus on the planning, design, manufacturing and marketing to manufacturers of optical disc drives (DVD and CD drives) for integration into products such as personal computers. The company will operate on a global basis. Other peculiarities are not disclosed.

While it is not said directly, the new company will be able to deliver products in larger volumes at competitive pricing, something that is required to broadly deploy new standards of optical discs. However, Sony and NEC compete fiercely against each other, as the former supports Blu-ray disc drives, whereas the latter promotes HD DVD standard. Collaboration between the companies may mean that both work on the unified optical disc standard.

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