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


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#1 of 11 EricRWem

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Posted June 24 2006 - 04:06 AM

Answer: Very likely.

http://arstechnica.c...60623-7121.html

http://www.extremete....1980865,00.asp


Not too many ways to sugarcoat this or make excuses if these figures are even in the ballpark.

I wouldn't want to go to Vegas on those odds. Posted Image

#2 of 11 Shawn Perron

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Posted June 24 2006 - 04:15 AM

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 of 11 EricRWem

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Posted June 24 2006 - 04:25 AM

Quote:
Originally Posted by Shawn Perron
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.

Indeed.

#4 of 11 Steve Tannehill

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Posted June 24 2006 - 04:26 AM

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

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#5 of 11 Shawn Perron

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Posted June 24 2006 - 05:36 AM

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

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 of 11 EricRWem

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Posted June 24 2006 - 05:55 AM

Quote:
Originally Posted by Shawn Perron
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.

It's not.

#7 of 11 Steve Tannehill

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Posted June 24 2006 - 06:08 AM

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

- Steve

#8 of 11 Robert Crawford

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Posted June 24 2006 - 06:26 AM

Quote:
Originally Posted by Shawn Perron
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.
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.

Crawdaddy

 

Blu-ray Preorder Schedule

 


#9 of 11 RobertR

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Posted June 24 2006 - 09:24 AM

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 of 11 Chris Gerhard

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Posted June 24 2006 - 09:46 AM

Quote:
Originally Posted by RobertR
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.

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 of 11 Steve Berger

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Posted June 24 2006 - 10:46 AM

There was an article on The Register http://www.reghardwa....layer_subsidy/
that surmised that Toshiba was marketing against the PS3 not the other Blue-ray Disk players.


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