Toshiba HD-A2 sells over 90,000 for the weekend (1 Viewer)

[Chuck Anstey]

Well I am not too sure. When DVD player prices dropped to this level around Xmas 2000, the number of players sold was ~4 million and the install base nearly doubled. That was when DVD was on the path to mainstream acceptance. I would expect that at least 2 million players (HD-DVD and Blu combined) would have to sell this Xmas season to claim that price was what was holding people back. Of course there may not be 2 million players available to sell from the all manufacturers combined.

 

[ReggieW]

I fully agree RAF.

I would also add that Beowulf and American Gangster probably won't be slouches either as big exclusives.

I also believe that combo player pricing will take some time to make it to consumer friendly levels. I doubt we'll see sub $500 combo players before QTR 4 08, but I could be wrong. So far, only LG & Samsung appear to be committed to dual format players, but the market could be shaken up by the arrival of a lower priced solution from Oppo or another similar vendor.

We'll have to just wait and see what the future holds.

 

[KurtEP]

This may help HD DVD in another way. A friend of mine is HD-DVD exclusive for whatever reason (I'm neutral). When this sale came around, he bought three HD-2A's to replace his Xbox add on and gleefully told me that between this and the Paramount deal, Blu Ray was done. I'm not ready to say that yet myself, but I'm willing to bet that this will see a significant increase in his purchases of HD DVD's, as he was holding back because of the format war. Now that he perceives that the scales have tipped, he'll probably feel much safer buying new movies in HD-DVD.

 

[Chuck Anstey]

Another random thought on this sale. Since Walmart and Toshiba are already spending a ton of money subsidizing these players at $98, why not just finish the thought and subsidize them to $49 to compete directly with DVD players. When Xmas shoppers go to buy another cheap DVD player for the bedroom, replace a broken one, or get a better upscaling player, they can choose an HD-DVD player instead for basically the same price. At $98 people will likely think "Why should I pay an extra $49 for a feature (HD-DVD) that I won't use". If they had it for "free" (like Sony did with the PS3), that would boost the install base . Sure the attachment rate for movie sales on a "free" feature is much lower, proven by the PS3's rather minor impact on Bluray movie sales (for an original 10:1 lead in install base), but those players add up to winning increase in movie sales.

 

[Richard Kim]

post deleted

 

[Aaron Silverman]

RAF,


Where have you read raves about Bee Movie? I haven't read a single review that implied it was better than average (let alone anywhere near Ratatouille's league).

 

[Aaron Silverman]

I bought the $98 A2 as a supplement to my PS3, but I haven't yet decided whether to keep it. It'd be nice to have, but I don't know that I want to start spending money on HD-DVDs at this point. There are already plenty enough BDs to keep me occupied for a good long time, and certainly more than I can justify paying to get.

Wish I had a better idea of how long we'll be dealing with two formats. I'm still thinking there are at least 2 years to go, which would make the A2 a good investment. We'll see. . .

 

[Sanjay Gupta]

That was the very same thought that first crossed my mind. Just a sample of the related posts on this forum, seem to indicate that a sizable number of them were bought as second players either for a second room and/or as an upgrade.

Either way, I am not sure how intelligent a business decision this is on Toshiba's part. After all, what after this? Irrespective of whether Walmart or Toshiba is responsible for it, Toshiba I am afraid has backed themselves into a corner with the $99 price. First of all, for consumer electronics, customers always expect prices to fall, never in history has there been a case where the prices have actually gone up. It is not going to be easy to convince people to spend $200 - $300 for something that now has a perceived value of $98 less the $ cost for 5 to 8 HD-DVDs. Thus any chances of Toshiba ever making any 'real' profit from HD-DVD players, is now out. Keep in mind, this is the same Toshiba that only a few years ago, I think 2003, was complaining how there is no more profits with DVD players selling for $150. It is quite apparent that Toshiba must have felt some really strong pressure to do something as drastic as this. There is a saying in Hindi, "Marta kya na karta?" roughly translated it means "If death seems imminent then what's the harm in trying pretty much anything?" For me, the big question that comes up is, what if Blu-Ray decides to go the same way and match Toshiba's desperation? What does Toshiba do then? Will they offer free HD-DVD players with every three-four HD-DVD movies one buys? Or better yet, will they actually start handing out cash or coupons for redemption along with HD-DVD players to have people take them home? It is plain and simple, bad business for one and all involved in the entire hardware chain from manufacturer to end retailer. After all, I am sure even the Walmarts, Best Buys & Circuit City's are not going to be too thrilled by a product that leaves them with no profits and which now seems to be destined to be used primarily as a loss leader by these retailers. But then, I suppose the retailers need some 'loss leader' each year anyhow, thus instead of the cheapo DVD players, they have HD-DVD to play the part and they can still look at making money from the HD-DVD software sales. But wait a minute, are'nt they giving loads of those away for free too? The only one's that may actually enjoy this are the studios, but the funny thing is, that the majority of them too are on the opposite side. Thus I suppose Universal, Paramount, Dreamworks and probably Warner too, are the only one's who are going to enjoy the fruits of Toshiba's desperation. Hmmm, who else thinks that all this may have something to do with retaining Warner? Yes, yes, I know Warner recanted their statements in this regard. But then, what else can be expected from them at this stage. Please keep in mind that if Warner were to openly declare that they are strongly leaning towards the other format, it would pretty much kill even the $99 HD-DVD player sales and thus the statement could end up becoming a self fulfilling prophecy. I am sure Toshiba must have raised the issue with Warner immediately after the statements were made at the BDA event, leading to Warner's press release recanting the prior statements of their executive.

PS: My post is not intended as a Blu-Ray vs HD-DVD post but simply as an observation from a 'solely' business point of view. Thus, please spare me any posts stating how this price drop and/or HD-DVD is great for the customer etc, etc. Personally, I am not too sure how this could be great for the customer either, since this could actually lead to the very existence, of movies on HD media, coming into question. By the way, I know one 'BIG' company that would be more than happy to see that outcome.

 

[Shane Martin]

Aaron,
Think "netflix". I won't deny myself HD video simply because I want a particular format to win which may not even win. It's about the movies, plain and simple to me and spending $99 on an HD player is a no-brainer.

If i were fanboyesque and super loyal to either format, then I can see why someone might find issue with a cheaper player on either market or a reluctance to purchase one but if the person is truly wanting HD and cares about the film preserved in it's best possible manner, I think a $99 A2 is a no-brainer.

Sanjay,
Unfortunatley I think your post comes across as a bit fanboyish.
using comments like
is a bit much. Why call it desperation and not call it what it is which is competition? I would bet if Sony were to offer $99 BR players, the Br crowd would not be saying "Sony's desperation".

Warner is the key player and since the have royalties coming from HD DVD, you bet they want HD DVD to win. I suspect while Warner is offering BR owners the movies, their real allegiance is still with HD DVD. Given how they started out the format war, it makes sense.

 

[KurtEP]

I think everyone who bought one understands the concept of a sale.

 

[Sanjay Gupta]

Desperation, is the word that I think befits the act more appropriately and that is why I have used it. How many other businesses do you know of, that have started to sell their products for a loss, or even for no profit? nVidia and ATI (now AMD) or for that matter Intel & AMD are fierce rivals and have been competing for the same market for ages, but I can't recall nVidia or ATI ever selling their graphics cards for a loss or even no profit. Intel and AMD compete in an industry which is quite price sensitive and they have both at times tried to outdo each other with their share of price cuts, but never has it been heard that either of the two are selling their products for less than manufacturing costs or even at cost. In business you hear about operating losses, but very rarely do you ever hear of losses incurred thru sales of the core product. Coke and Pepsi, two of the most fiercest competitors, have you ever heard of them selling their product for less than or equal to their manufacturing cost. Please if you don't understand business, then please don't comment on such issues. My tone might sound a little harsh but that is because I definately don't take kindly to your referring to me as a fan boy. Specially considering that I made it a point to mention in my post that my statements are entirely from a business perspective and not from a Blu-Ray vs HD-DVD perspective. As for the hypothetical question that you have raised, "What if Sony were to offer $99 BR players?" my answer as a professional management & marketing consultant, would be quite simply, it depends on whether Sony was the first to do it or whether they were simply reacting to the desperate acts of the competitor. Now if Sony were the one's who initiated such desperation, then 'desperate' is exactly what I would have termed their act as, irrespective of my personal feelings in the Blu-Ray vs HD-DVD issue. Each and every act of Toshiba's has been to simply try and survive rather than win the battle against Blu-Ray, whereas it has been quite the reverse on the Blu-Ray side. Toshiba would be quiet happy and content with just eeking out a survival for HD-DVD while Blu-Ray attempts to make it a single format market. That in itself says a lot about which side is more confident about where they believe they stand in this 'format war'. It's funny you mention Warner's actions in this whole 'format war', for their actions have been absolutely professional, with sound business taking precedence over any emotional attachement that Warner may have to the HD-DVD format, specially since they were equal partners with Toshiba in developing the DVD technology and thus some of the technology involved in HD-DVD. Considering that Warner has a direct financial stake in HD-DVD, it is but logical for them to have supported it and thus intially their stance was to exclusivly support only HD-DVD. But with time, as they realized that most factors were in favor of Blu-Ray winning this war, they took a sound and sensible decision to support both formats, after all expecting them to give up on HD-DVD at the very outset would have been quite fool hardy, considering their direct stake in the format. Since then they have supported both formats but to some extent they have tried to help HD-DVD along discreetly with releases such as 'The Matrix Trilogy' and in other ways, but they have resisted emotions clouding their judgement and they have recognized that Blu-Ray has consistently given them better returns than HD-DVD on titles released by them to both formats. Thus I believe that they have, in keeping with their good business judgement, decided to drop support in favor of one exclusive format. By inferences made by a Warner executive at the recent BDA event in LA, they may have indicated which way they believe the dice might fall. But in keeping with their consistently good business decisions they have allowed themselves the coming holiday period as a final test as to which way they may decide to go. Ofcourse as any good business they would want HD-DVD to win and is probably extending their help to HD-DVD in whatever way they can during this coming holiday period. I am also certain that as hard as it might be for any human or a corporation to overlook their emotional and in this case financial attachements, they will declare exclusivity to one format very early in the coming new year.

 

[ReggieW]

I take it YOU KNOW exactly what it costs Toshiba to manufacture each player? and that YOU ALSO KNOW for a fact that they are making no profit and how much they're losing for each player? If not, this is nothing but FUD (certainly an overused term, but it applies here). No matter how many paragraphs you write attempting to spin away these sales, this is something Toshiba has apparently been PLANNING for many months. Paramount mentioned this as one of the primary reasons why they went exclusive whether you choose to believe it or not.

 

[Sanjay Gupta]

Price reductions during regular sales, normally don't entail selling the product for a loss. Normally, the only times you would price a product at a loss during a sale or otherwise, is for the purpose of clearance of 'dead stock' and in some rare cases of 'over' stock. Newest and latest technologies are not 'normally' used as 'loss leaders'. Rather, it is the newest and latest technologies on which the margins are 'generally' the highest. 'Loss leaders' are generally products that have already matured and have been adopted by the masses and which are expected to draw in huge numbers. Price reductions as part of a 'sales' promotion is normal, but what is not normal is for that product to be repeatedly put up for sale at drastically reduced prices as is being suggested will be the case here. As per reports, the so called 'sale' will be repeated several times over the next two months. Now, that is not normal. Thus, when a customer sees a product being advertised consisitently, for a certain fixed amount, over an extended period of time, the customer will form a perceived value for that product, which is the advertised 'sale' price.

 

[Clinton McClure]

I'd buy it and go format neutral. As things are now, I'm happy with my HD-A1.

 

[troy evans]

I think Toshiba's thinking is in catching up to Blurays install base. No small part due to PS3. When they catch up I believe we'll be seeing quite a different take on the old software 2:1 ratio that is now in Bluray's favor. Going into the holidays HD DVD has significant value on it's side and Bluray can't touch it. There's no way around it.

 

[Sanjay Gupta]

Honestly, it is not too far from the realm of some of my professional work to be able to find out exactly, or atleast a very close estimate, as to what it costs Toshiba to make an HD-DVD player. But then again, there is no point in doing that excercise, for you will ofcourse want some iron clad proof of the same and in any case, YOU ARE SO RIGHT. At a price of $99 for a HD-DVD player bundled with 7-8 HD-DVD movie discs, Toshiba just has to be making an obscenely huge profit and ofcourse the Best Buys and the Circuit Citys must also be overjoyed with their share of the profits from the same, not to forget the profits taken by any OEM manufacturers that may also be involved in the manufacturing process. Oh yes, I almost forgot the reason why YOU HAVE TO BE RIGHT, is because Toshiba has been planning to do this for several months now. After all, they have only been giving a sound beating to Blu-Ray, (2:1 is it?) for pretty much the whole year. Oh and lest I forget, YOU HAVE TO BE RIGHT, because Paramount mentioned that their primary reason for going HD-DVD exclusive is the coming holy grail of HD, the 'huge profit' generating reaaaaaally cheap HD-DVD players from Toshiba. Oh, and also because Paramount mentioned how they got no money from anyone in either cash or in any other forms of incentive for dropping Blu-Ray support. For some strange reason though, while they had all this to say to justify why they went HD-DVD exclusive, they forgot to mention the very thing that they are in the business of, selling movies that is, and how the format that they dropped was so consistently being outsold by a small margin of 2:1, and this on their own titles too.

But the number one reason, why YOU HAVE TO BE RIGHT is, that since both HD-DVD & Blu-Ray use a similiar drive, the same 'very cheap' blue laser, pretty much the same audio and video electronics inside and all the same audio and video codec support, the HD-DVD player must definately cost substantially lower to manufacture than a Blu-Ray player. After all, HD-DVD has dual video processors, something the profile 1.0 Blu-Ray players don't and we all know how dual video processing must cost far less than the single video processor of the Blu-Ray players. Finally, how can we forget, that HD-DVD also has ethernet, which Blu-Ray players don't and ofcourse as is the norm, all ethernet manufacturers have to pay a payback to their buyers to have their products taken of their hands. Those paybacks by manufacturers to have ethernet included in the HD-DVD players must be really piling on and helping in further reducing Toshiba's manufacturing cost. Also, the fact that Blu-Ray has an install base of only around SIX million + worldwide, while HD-DVD has a whopping install base of approx Half a million + worldwide, the economies of scale must be working out really great for Toshiba, thus enabling them to have reduced their manufacturing costs so drastically in a little over 18 months. While Blu-Ray with their miniscule sales of over SIX million + has a long way to go before they can even dream of achieving the economies of scale that Toshiba has. Oh, the fact that Toshiba is pretty much the sole manufacturer of HD-DVD players must really help in bringing down costs too. While Blu-Ray has all these small little companies from all over the world, poking around in their labs and simply increasing the manufacturing cost of Blu-Ray. It's no wonder that inspite of all the 'competition' from HD-DVD, Blu-Ray is having such a tough time dropping their prices to try and even come close to those HD-DVD prices and still be profitable for all. I am sure the BDA must be really envious of the 'holy grail' of HD, the $99, Toshiba HD-A2, HD-DVD player. Didn't you hear, they just sold a jaw dropping 90,000 HD-DVD players at the hugely profitable grand price of $99 and do keep in mind that the free HD-DVDs that come with the player only cost approx $120 at normal retail prices. Someone really ought to give an award or two for such a remarkably awesome sales and marketing feat, to Toshiba and company. My suggestion to Blu-Ray, don't even try this, after all we don't want to be hit by reality and find out the miniscule numbers that a sale involving a Blu-Ray player bundled with 7-8 free Blu-Ray movies at a price of $99 would generate.

PS: I just found out, that if one tries hard enough, being condescending is not really that difficult. By the way, for those that only care about 'cheap' why not go in for that third format that is floating around. I am sure it will be good enough for the vast majority of the masses. But then again DVD probably is already good enough for the vast majority of the masses.

 

[troy evans]

Sanjay, where did you get the worldwide install base for Bluray is 6 million+ ? That is something I would very much like a link for. See the problem is for that 6 million to half million ratio to make sense Bluray disc sales would have to be at least 4:1. Clearly they are not. Link please.

 

[Sanjay Gupta]

That figure actually is just for PS3 worldwide sales, I have not even bothered to include the stand-alone player numbers in that figure. As for the HD-DVD figures, the fact is that outside of the US and a small number in Europe, HD-DVD is pretty much non existant in most markets accross the world. Thus the US figures are pretty much all there is, plus a small number in Europe.

http://bp1.blogger.com/_0n1DAuTIdew/...ales-6mill.jpg

Here is another link, this one shows a slightly lower number of PS3 sold, but if you were to include the worldwide sales of stand-alone Blu-Ray players, you should still get around a 6 million install base for Blu-Ray.

http://vgchartz.com/

You know what I find really funny? The fact that a lot of people claim 'Region Coding' as their major reason for supporting HD-DVD against Blu-Ray. Personally I too detest Region coding on DVD and Blu-Ray, but what good is not having region coding going to be if there is no HD-DVD outside of the US and Europe? What about the rest of the world? It took around 3-4 yrs after the launch of DVD for it to officially reach India. Whereas, it took only 6 months for Blu-Ray to be officially launched and be available here. HD-DVD till date has no signs of appearing. Believe it or not, the third HD format that I alluded to earlier has actually been making news here and software and hardware companies have seemingly signed up to release product here very soon. My biggest fear is that due to all this price sensitivity and 'good enough' attitude we might actually get saddled with some lame HD format to live with while HD-DVD and Blu-Ray whither away. I know such a scenario is highly improbable, but for countries like India and in South East Asia, I would not put it in the realm of impossibility. I guess I should stop now, I can see this post turning into a Blu-Ray vs HD-DVD post, which would be a strict no no.

 

[Chris Quinn]

I find the whole everyone will expect $99 HD DVD players argument suspect. If HD DVD takes off for mass adoption not many outside of AV geeks and bargain/deal website followers will know that they went on sale for $99 at one point. I do think that we will see $99 on entry level HD DVD players everywhere for the 08 holidays since those are $199 now.

 

[KurtEP]

A slightly older generation HD DVD player being sold during a heated format war probably doesn't fit the usual paradigm. It makes a lot of sense to sell these at a low price for a variety of reasons. It'll give the vendors more software sales, sell more HD TVs and possibly even hasten the end of the format war.

I think the fact that they sold so quickly and are now apparently sold out in most places speaks volumes about the perceived value of this product. This was a great deal, and everyone knew it.