Matsushita, Philips to Make New Cassette : * Electronics: The two firms join to launch a new product that has the sound quality of a compact disc.

Philips of Holland, Europe’s biggest consumer electronics conglomerate, said Friday that it will join forces with Matsushita of Japan to launch an audiocassette with the sound quality of a compact disc.

In a widely expected move, Philips Electronics NV said it will jointly license the technology for its Digital Compact Cassette to record companies, blank-tape makers and hardware manufacturers with Matsushita Electric Industrial Co., the world’s biggest consumer electronics company.

The marketing agreement is a direct challenge to Japan’s Sony Corp., which plans to introduce competing technology early in 1992.

In the battle to get record companies to use the new cassette system, Philips can now also add Matsushita’s MCA to its own record company, Polygram NV.

Licensing of DCC will start this year, and the first cassettes and cassette players are expected to reach the stores in the first half of 1992, Philips said.

DCC will allow music lovers to enjoy CD sound on systems that can record and erase. It is also designed to not to “jump” when jogged, a problem for portable or car-based CD players.

Sony’s Mini Disc, a miniature compact disc, has the same attributes but is a completely different system.

The new agreement, therefore, throws the two Japanese companies into the same kind of competition for market dominance that they experienced when Sony introduced its Beta videocassette format and Matsushita offered its ultimately successful VHS version.

Analyst Roel Gooskens at stockbrokers Van Meer James Capel said demand for Philip’s new cassette will depend on consumers’ perceptions of DCC versus Sony’s MD.

“We’ll just have to wait and see. But if it is successful it could be a multibillion-dollar market,” he said.

Philips hopes the fact that conventional, analogue cassette tapes can still be played on its new system, and its plans to make pre-recorded DCC tapes available simultaneously with the players, will make DCC an early hit with consumers.

“We have received many inquiries from both hardware and software companies. The first licensing contracts are expected to be finalized in the coming months,” said Wim Wielens, managing director of Philips Audio worldwide.

Philips’ spokeswoman Angelique Hoogakker said record companies other than MCA and Polygram are enthusiastic about DCC.

“We have had very positive public statements from EMI and Warner,” she said.

Philips views the introduction of DCC as a key development for the company on a par with its previous audio inventions, the CD and the analogue cassette.