Digital Journal — Selling at a loss in the electronics industry is as taboo as admitting you like Ashlee Simpson’s music. But Toshiba is losing $200 (US) for every HD-DVD player it sells, according to technology analysts at iSuppli.
Toshiba’s HD-A1 player is priced at $500 (US) but costs $700 (US) to deliver to retail. The research firm suggests Toshiba is subsidizing the player, which debuted in North America three months ago, to gain market share over rival Blu-ray DVD units. Those products cost upwards of $1,000 (US) each.
iSuppi reports the HD-AI is so expensive to build because of inefficient design and pricey components. “The Toshiba HD-A1 is basically a combination of a low-end PC and a high-end DVD player,” notes Andrew Rassweiler, teardown services manager and senior analyst for iSuppli.
Toshiba’s so-called subsidization is unheard of, especially in DVD hardware. While it’s very common in video-game consoles where sellers can recoup losses through subsequent game sales, what can Toshiba gain in the end? While Toshiba receives a licensing fee on HD-DVD media — because it’s one of the format’s founders — such royalties are unlikely to be great enough to support continuing volume sales of the Toshiba HD-A1.
An unusual tactic may impress consumers who prefer a less expensive next-gen player, but Toshiba could be pulling a bluff here. After all, Toshiba admitted recently it wants to develop a unified format for next-gen DVD discs. Perhaps the company doesn’t want to put all its eggs in the HD-A1 basket.
As early adopters make their move for either Blu-ray or HD-DVD, Toshiba is setting a strange precedent with their debut player. The question is, what are they truly planning?
