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A NEW HOPE for unification (1 Viewer)

Shawn Perron

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That doesn't sound like a definitive no. It seems more like an "I was told we are not.".

The company that broke down the cost of the player inventories every component in the player and compiles a list of what each part would cost to purchase in bulk by a major manufacturer. While there may be some flexibility in thier final cost, I find it highly unlikely thier assessment is off by over $200.
 

RobertR

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The only way Toshiba could completely refute it would be to show everyone what their actual costs are, and no one expects that level of transparency. The same can be said for Sony's costs with their standalone player, the PS3, and BD replication costs. We just don't know.
 

Austan

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Great find RobertR!!! As time goes on and more real data is found, these debates on the Format War gets less heated with opinions. Of course, people will continue to read what they want. Subsidizing is still debatable but I will not use it as "facts" in further discussions (unless someone finds another article link ;) ). Also, Sony has already admitted PS3 subsidies so thats still a "fact" in my book.

On to the subject of "Unification"... I'm still at a lost as to what Toshiba means. I thought the 2 formats are incompatible.
 

Kevin. W

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We can only wait and see. From what I've read movies such as LoTR, KK will have no problem fitting on one disc. As far as the HD add-on, again we can only wait and see. If game makers utilize the extra space, then games can be bigger and more complex.
 

JohnS

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Exactly!
I own a HD player and a handfull of movies and am enjoying them on my new 50' DLP 1080p TV. I have no worries!
 

MarioMon

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Don't know if this has been discussed but I just can't understand how blu-ray and HD-DVD players can cost so much much more than even a decent SD DVD player going to $200! For the price consumers are being asked to pay for these players, one could build whole computer with a fairly highend graphics cards and all that would be needed is a basic blu-ray or HD-DVD optical mechanism. The sophistication of today's electronics is such that these new players shouldn't be going for much more than $500 IMHO. Toshiba can't be losing all that much selling their player for $500 but Sony has to be out to lunch trying to gouge consumers for $1000 a pop.
 

Lew Crippen

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I don’t see many ‘high end’ computers on the market for $500—at least ones with sophisticated graphics and audio cards.
 

Robert Crawford

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However, it appears that some IT companies have a big interest in making this format viable so it's possible that cost of parts are lower than expected. Anyway, the only factural information that we do know for sure is that the company is denying they're selling these players at a loss whether you believe that is another matter.



Crawdaddy
 

Edwin-S

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I would say it is the company, considering that the executive talking is the President of Toshiba.
 

Lew Crippen

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I view with skepticism the claims that Toshiba is losing significant amounts of money on each HD player sold. And I fully expect that there will be price reductions in the future—even if HD remains a niche market, although if it does there will not be so much of an incentive to go below a $500 price point—but there still would be a great deal of pressure on the $1,000 machines.
 

Cees Alons

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So do I, Lew.
Apparently, most of those people don't know how market costs work.

Let's take this to an extreme (for explanatory purposes): after extensive RD, developing costs, participation in international talks, etc. you start producing a new machine and then contribute all costs to the first one sold: that machine would be priceless, almost. If you sell it for less: a huge loss!

Yet, no-one will ever do that. So they estimate a number of machines they may be able to sell in a certain time frame and, furthermore, choose the amount of RD they will want to earn back from that batch.
And they do that anew for the next batch. And so on.

Yes, it's partly an enterpreneur's risk: if none is sold, or too less, you lose. But there are many other considerations: you want to "establish" a price for the machine as well. And the (RD, etc.) money is already spent. It's no longer proportional to each item sold.

They already absorbed that first "loss" (costs). They don't lose more because more are sold!

So, we really don't know if Toshiba is "losing" on those machines. In my example above, if they sold the first machine below the huge costs attributed to it, yes they would "lose" the difference. But it doesn't mean a thing in normal commercial thinking.

And the bottom line is: you certainly cannot multiply the "loss" on the first batch with the total number sold if they sell more than that batch, and then think you have estimated their total loss.

The more they sell, the lesser the "loss" on each machine will be, until it turns into a profit: machines just drop from the end of the belt at marginal costs.

And the other profit is: if they "win" they will receive a lot from licences on other manufacturer's equipment.

It's a business calculation/decision.


Cees
 

Rob_Walton

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The original BOM (Bill of Materials) estimate from that website (who have some sort of form in this area) does not include such considerations as R&D, shipping, packaging, or advertising. So in a very real sense there's no indication that Toshiba have recouped any of their R&D expenditure on these early units. Though considering the low volume so far claimed by Tosh themselves (20,000 in the US) the loss of around $300 per unit is less significant than it might at first seem. What that means in practical terms is that Toshiba may be losing ~$300 per player in terms of components, but are in fact losing even more in terms of R&D, shipping, packaging, returns, firmware upgrades, and advertising.

Much of the arguments that they aren't losing this much per player seem to boil down to a simple "I don't believe it" with no explanation for the small number of players (with many stores reporting sold out, and hence lost sales opportunities) or the BOM estimates which cost the player above retail.

So far Toshiba's strategy (in the US at any rate) seems to be to price their player as low as they can bear, in an effort to create some market traction, and take a slice of mind-share from the boys in Blu. While initially appearing to be successful, this plan is undermined by the small number of players apparently in the market so far. The other unfortunate side effect has been the withdrawl/postponement of players from manufacturers other than Toshiba. The Sanyo in particular looked like a nice bit of kit, and was due for a March launch. Not heard anything about that player for quite a while now. Perhaps that means the pricing structure Toshiba have adopted is not conducive to other companies with fewer patents in HD DVD joining in the game. At least for now.
 

Lew Crippen

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In addition to Cees’ points I do know that most people have very little idea how to accurately price and cost services, hardware and software in the IT (and related) world. And while I don’t know the expertise of those putting together the BOM in that article, I do know that it is not likely that they have access to Toshiba’s actual costs for any particular item (not forgetting that large corporations often have quid pro quos with other corporations for how various items are acquired) or items and it is certain that they do not have access to Toshiba’s accounting methodology as to how they have decided to view those costs over time.

If the actual costs are not clear and the way those costs are considered are unknown, it stands to reason that it is far from certain that the view taken in the article provided is accurate.
 

Lew Crippen

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If one looks only at the number of players sold today, there is little doubt that Toshiba has lost significant money on each sale. My point (and, I think Cees’) is that Toshiba is taking a very different view in determining if they are losing (or going to lose) money on this player (and format).

Certainly if, over time, there is not an increase in sales, or new models introduced at offer a larger margin, or other factors anticipated or not by Toshiba don’t occur, then it is likely that the company will suffer a loss on that player. But one can’t know yet.
 

Edwin-S

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All three of the articles linked at the beginning of the thread are attributing the unification remarks to Toshiba President Atsutoshi Nishida. He made the remarks during the annual shareholder's meeting, according to the articles, . Designating him as President of Toshiba indicates, at least to me, that he is further up the hierarchy than a division manager. Where did you see him designated as a division manager?
 

Edwin-S

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Regarding Nishida. Checked his bio. He is right at the top: president and CEO.
 

Rob_Walton

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:) The discussion has moved on, and we're talking about the current profitability or otherwise of the A1. The comment on this situation came in an article linked by RobertR halfway up this page, which was then picked over by Cees, Lew, and myself.

Lew, I agree that few have the knowledge to accurately assess the true cost of these components. On the other hand someone in the Australian wing of Toshiba (no offense to any Aussies) is perhaps also not best placed to know the current workings of his company. In fact his statement is less a refutation of the BOM analysis, and more his belief that Toshiba wouldn't be likely to sell at a loss in this situation. From the tenor of his words there's no indication he's based this opinion on information about the A1, rather on his previous understanding of Toshiba's business strategies.
 

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