Is Toshiba losing money on sales of each HD-DVD player? (1 Viewer)

[EricRWem]

Answer: Very likely.

http://arstechnica.com/news.ars/post/20060623-7121.html

http://www.extremetech.com/article2/...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.

 

[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.

 

[EricRWem]

Indeed.

 

[Steve Tannehill]

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

- Steve

 

[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.

 

[EricRWem]

It's not.

 

[Steve Tannehill]

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

- Steve

 

[Robert Crawford]

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.

 

[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.

 

[Chris Gerhard]

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

 

[Steve Berger]

There was an article on The Register http://www.reghardware.co.uk/2006/06...layer_subsidy/
that surmised that Toshiba was marketing against the PS3 not the other Blue-ray Disk players.