Toshiba Reportedly Subsidizing Early HD DVD Sales
June 28, 2006
Toshiba, which was eager for manufacturers to be first-to-market with HD DVD technology over lone competitor Blu-ray (and has succeeded), is reportedly going all out to make sure it retains its early lead in initial next-gen player sales. Blu-ray units are coming many weeks later than the HD DVD launch, having just begun reaching store shelves in North America.
According to market researcher iSuppli, as reported at Digital Home Canada and other industry Web sites, primary HD DVD mover-and-shaker Toshiba is willing to take a loss on early sales in order to get a growing number of consumers committed to the HD DVD format. And why go to such lengths to gather as many format supporters as possible here in the early going? Several analysts point to the pending late-2006 introduction of PS3 from Sony, which will support Toshiba's competitor format, Blu-ray.
Although Toshiba has not commented publicly on pricing strategies, iSuppli reached the conclusion that Toshiba is losing money, or breaking even, on Toshiba's HD DVD players after the researcher reportedly literally dissected Toshiba's HD-A1 player and priced all its components.
According to that analysis, the bill-of-materials costs alone exceed the HD DVD player's average $500 retail price. Thus, Toshiba is subsidizing the HD-A1 by at least $175 per unit, said iSuppli, which added that the Toshiba player is basically a combination of a low-end PC and a high-end DVD player.
On the Blu-ray side, disc players have just begun selling for price points hovering just below $1,000. It's far too early to begin scrutinizing any meaningful sales figures yet -- especially since the potential sales impact of PS3 consoles on Blu-ray's success, as a format will not be known until early 2007 or later.