Sonic will buy DivX for cash and stock for about $320 million in cash and stock. Both businesses want to evolve past the imminent death of the DVD, the mainstay for business for both companies.

Hardware licensees still accounts for about 70% of DivX revenue (at least last year's).Sonic makes software that movie studios and others use to author DVDs and other forms of content. It also sells programs consumers use to burn CDs and DVDs (under the Roxio brand, as well as a popular Macintosh’sToast). Both benefit from Blu-ray, but Blu-ray has not yet compensated for a recent drop in DVD sales. Sonic purchased CinemaNow, a pioneer in the movie-download business. Now Best Buy and Blockbuster use Sonic’s platform to offer a video service.

The DivX technologies are expected to give Sonic a more extensive solution for Internet video delivery including the dominant tools for content preparation in "the cloud," video playback, and Hollywood-approved DRM.

DivX adds leverage to Sonic's strategy of CE deployment – the DivX player and DRM is deployed in products from more than 150 different CE manufacturers WW on millions of devices.

Go Sonic Buys DivX, Not Everybody Happy

Pioneer: Stores, Yes. Flat Panels, No.
Despite recognition for Kuro, Pioneer will exit from the flat-panel TV business (and they will also cut 10,000 jobs worldwide).

Its fifth straight year in loss, Pioneer faces a forecasted loss of $1.4 billion. Yet Pioneer Electronics recently opened its second U.S. retail store, a 3200 square-foot location in Phoenix, Arizona. The company’s first retail store opened in California’s Orange County, in Q3 2006. This highlights the importance vendors give to their retail efforts.

Go Pioneer Pulls Out of Displays

Networking mogul Cisco loves video but has it flipped in buying Pure Digital? Pure Digital out-smarted Asian producers to get to low-cost video first. Pure Digital's small, cellphone-like cameras sell for $130 to $230 with a simple one-button interface, a fold-out USB port and a simple software to move videos to the Web. An HD version of the camera is only $229.

That’s why Pure Digital has sold 1.5 million Flips, compared to the camcorder market's 20 million units a year in sales. And why Cisco will pay $590 million in stock for Pure Digital.

Cisco will try to integrate the Flip with home-networking products (Linksys routers and Scientific Atlanta set-top boxes), and hopefully use the Flip's cheap HD video technology to take home its pro video conferencing system, Telepresence.

By 2012, Cisco expects video will account for 50% of all consumer bandwidth, about 2X the total number of bits per second that consumers use today.

Go Cisco Buys Flip