Is Toshiba losing money on sales of each HD-DVD player?

Discussion in 'Playback Devices' started by EricRWem, Jun 24, 2006.

  1. EricRWem

    EricRWem Screenwriter

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  2. Shawn Perron

    Shawn Perron Supporting Actor

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    I don't think anyone will find this surprising. That being said, the $700+ price tag doesn't even include any money to pay for R&D. I'm not so sure I'd be very happy if I were a share holder in the company though.
     
  3. EricRWem

    EricRWem Screenwriter

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    Indeed.
     
  4. Steve Tannehill

    Steve Tannehill Ambassador

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    Yeah, and Microsoft lost money on every Xbox sale. Nothing new (or unusual) here.

    - Steve
     
  5. Shawn Perron

    Shawn Perron Supporting Actor

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    I wasn't aware it was such a common practice for a consumer electronics product to be sold for a loss when not dealing with video game systems.
     
  6. EricRWem

    EricRWem Screenwriter

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    It's not.
     
  7. Steve Tannehill

    Steve Tannehill Ambassador

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    But it was. I'll leave the research as an exercise to the reader.

    - Steve
     
  8. Robert Crawford

    Robert Crawford Moderator
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    Companies make decisions to temporarily lose money all the time, sometimes, in the interest of gaining market share. It's a long-term strategy instead of going for the short quick money that hopefully will pay larger dividends down the road which is probably the strategy in this case. Other times, it might be to increase sales for other reasons like increasing the value of their stock.
     
  9. RobertR

    RobertR Lead Actor

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    Obviously Toshiba decided this strategy is worth it to them. If they don't sell many players, they don't lose much money. If they DO sell a lot of players, they gain market share. So it's a win/don't lose all that much strategy.
     
  10. Chris Gerhard

    Chris Gerhard Screenwriter

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    It is a risky strategy but if I was a shareholder, I would approve. I think it is the product's only chance. In my opinion, it is a very good first generation product and the likelihood HD DVD will succeed is far greater now than before Toshiba decided on this strategy. It is still far from clear it will result in anything other than huge losses though. I think pricing it a cost plus would have doomed it to a quick death.

    Chris
     
  11. Steve Berger

    Steve Berger Supporting Actor

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