Sony and NEC have finalized a merger of both company's optical storage operations.  This will form a new company called Sony NEC Optiarc Inc.  The combined optical storage operations will focus primarily on manufacturing drives for the PC. 

It’s an interesting merger that will begin in April considering NEC has been publicly backing Sony’s chief rival, HD DVD.  This is surely not good for Toshiba who started the HD DVD format and stands to lose an ally in the war against Sony.

NEC has publicly stated they have no intention of diminishing its support for Toshiba's HD DVD standard.  And in an ironic twist Sony has actually stated that they might even be involved in the production of HD DVD drives in this agreement with NEC.

But it’s Sony who wears the pants in this family.  Sony will control 55% of the operation while NEC has 45%.  Analysts say the new Optiarc Inc could amount to a total of 20% of the global optical storage market.  This would place Sony NEC Optiarc Inc just one behind another otpical drive alliance between Hitachi and LG.  Named Hitachi-LG Data Storage the optical data giant controls 28% of the global market.  Mergers between consumer electronics company’s optical storage departments seems to have established itself as a theme.  Back in 2003 another such alliance was formed between Toshiba and Samsung called the Toshiba Samsung Storage Technology Corporation.

Despite NEC’s talk of maintaining support for HD DVD through this alliance and Sony’s possibility of producing HD DVD drives in the short term.  It doesn’t look good for Toshiba who are getting battered in the format war against Sony.  A majority of the industry support has gone to Blu-Ray and it seems unlikely NEC is going to be able to maintain much of a stand on HD DVD in the long term.  It’ll be interesting to see how it all pans out.