Analysis: Blu-ray victory may damage Xbox 360

New York (NY) - Microsoft has yet to come forward with an official statement on Toshiba’s decision to drop HD DVD. Analysts however, already believe that the company may be facing increasing pressure from Sony as a result of the outcome of the format war.

Ralph Shackart, an analyst with William Blair, said that “Blu-ray’s victory could drive market share gains for the PS3, as we believe consumers will now be more willing to pay up (versus 360) for the standard Blu-ray player.”

Microsoft originally announced in 2005 its decision to focus on HD DVD, but did not believe that HD DVD would be a long-term solution for high-def media. In January 2006, the company announced that it would offer an external HD DVD for the Xbox 360 – which was launched in November of that year.

Sony shares were up about 4% in early Tuesday trading.