Together they have 20 percent of the market

Nov 17, 2005 15:05 GMT  ·  By

Sony and Nec signed a deal in order to merge their optical disc drive businesses launching a new company. On April 1st, the first day of the next financial year in Japan, the two companies will unveil the new venture. The terms of the deal give Sony 55 percent of the unnamed company and Nec the rest of 45 percent.

The new company will manufacture, plan and design optical disc drives for computers and DVD players. The new brand will manufacture both HD DVD and Blu-Ray discs, even though Nec is a major HD DVD backer and, as known, Sony supports Blu-Ray.

Although both companies are already major optical disc drives manufacturers, the merge plan includes bringing together Sony's pick-up technology and Nec's optical disc LSI (large scale integrated circuit).

The merge idea came up when Nec began a business relationship with Sony, ordering drive parts from them. The two companies thought that they are more complementary than competitive and decided to merge on this segment. Together, Sony and Nec have an estimated market share of optical-disc drives of around 20 percent.