Toshiba Will Lose $200 For Every HD-DVD Player Sold |
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When it comes to business, we don't know much. Okay, we know zilch except for one thing: you go into business to make money, not lose money. So can someone please explain why Toshiba is losing approximately $200 or more on every HD-A1 HD-DVD player it sells?That's what the published report from analyst firm iSuppli (not related to iPod or anything with "i" in front of it) said anyway. According to the report the components needed to assemble the HD-A1 came to approximately $674. This is higher than its estimated retail price of $499 set by the company. If you add the testing, cables, remote control and packaging, the cost goes up to more than $700.
Why the losing price? Probably to establish a toehold in the next-generation DVD market over the more expensive Blu-ray (about $999). This is where the pay-off could come. According to the Consumer Electronics Association, in the U.S. alone, estimated DVD player sales totaled about 16 million units in 2005, not counting PC sales and game consoles. iSuppli says:
"It's unusual to find this level of subsidization outside of the video-game console and mobile-phone markets. Presumably, Toshiba anticipates making back any initial HD-A1 losses with subsequent products. There is little question that Toshiba had to use a high-cost design for its first model. But there is a big question as to whether pricing its player so much less than Blu-ray is worth the financial risk."
iSuppli also forecasted that shipments of both HD-DVD and Blu-ray CE devices will rise to 65 million units in 2010, up from 1.6 million units in 2006. And who will win the Next-Gen Format War? The firm predicts both formats will win ground in the marketplace and it will be too close to call.
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Comments [refresh]
By pricing the player at such a price, they are hurting themselves severely. PC makers have been buying up these players to rip out the drives and installing them in computers. Read other artitlces can you can understand why, because its way cheaper then buying a drive thats designed for a computer in the first place.
What does toshiba plan to make money on? The royalties for the format? They dont have that many great movies out anyway and for the ones that they do, people already own them on DVDs. So only people with HD-TVs that can show the quality of the higher resolution will buy them or maybe they dont see the need to.
I guess this is just to put in perspective what the HD-DVD add-on would cost.
200-300 probably.
A lower price to greatly compete with Blu-ray to insure HD-DVD wins the format war at the cost of 200 bucks per player. They attribute this to their HD-DVD investments to make sure it wasn't a waste of time to develop the format.
Toshiba has already lost more than 50 million dollars investing in the technology development. Subsidizing the product isnt a lot different than a drug manufacturer spending millions on coming up with a drug, and then spending 50% or even as much, marketing it through free-samples and paid vacations for prescribing doctors.
I won't buy HD-DVD or Blu-ray...there is no point at this time.
It's what alot companies do, they lose money on the hardware and make money off the software.
i cant wait to see some of the great software coming for next gen video players!
its not a game console, it's a VIDEO PLAYER you get VIDEOS
What real advantages do either format offer to the average consumer?
They will both be in HD so they are both going to look great.
You go into a store and the HD player and discs are cheaper and they are pretty much the same quality (all the 1080i *****e Sony keeps bragging about doesnt make too much difference does it) so what are you going to buy???
I reckon they have dropped the price because of the PS3. They will sell more stand alone HD-DVD players than Blu-ray. By the time HD discs are mainstream the costs will have dropped and they wont be losing out anymore.
Its a promotion. You have to spend money to make money.
The price gives the advantage but PS3 is really the key to what format comes 1st. There isnt room for 2 formats.
If the PS3 isnt so strong its not going to take much for HD-DVD to take the lead.
when you buy in bulk you can afford to do that. not only do they get each individuall part cheeper. but when you buy 4 million of each part you definalty get a discount. im sure there not loosing money