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Toshiba Subsidizes $200/Unit on New HD Player
WestTexasWaltz writes "According to a teardown analysis, Toshiba is losing $200 per unit, of its new HD DVD player, in order to gain some marketshare. Interesting that integrated circuits account for more of the cost than the drive itself. Also, this particular analyst concludes that Blu-ray and HD-DVD will "not be a repeat of VHS vs. Beta" and that a stalemate is the likely outcome."
No its called a loss leader, it's a common practice among the likes of walmart, and other large corporations. The supreme court has ruled that loss leaders are not unconstitional, A big mistake if you ask me. Actually many countries allow loss leaders, the most notable example an exception of a democratic nation banning loss leaders is when Germany banned them a few years ago.
It "is", under certain circumstances (overseas dumping, or abuse of a moonoply position), not in general. People here may tell you otherwise, but that's because they're "idiots".
What I'm listening to now on Pandora...
Predatory pricing is only illegal when it is done to acquire or sustain a monopoly. Toshiba is in no way a legal monopoly, whereas Microsoft is a monopoly and has been legally declared such in court.
It's kind of like how owning a gun is only illegal when a convicted felon does it. Do you complain about the injustice there?
Like a gun, it's not predatory pricing itself that's illegal. It's what you do with the predatory pricing that's illegal. Toshiba is in this case not doing anything anything in their action of selling HD-DVD players below cost which qualifies as illegal.
Since I don't follow Blu-ray vs HD-DVD too closely, is Toshiba the only manufacturer of HD-DVD? What is their incentive for marketshare in this area?
From the article:
I heard that video game consoles being loss leaders was an urban legend, perhaps due to faulty analysis. The companies, especially Nintendo, break even pretty much at time of launch. Or may take a slight loss but nothing like $200 per unit.
Netflix already stocks HD-DVD and Blu-Ray discs. You just tell them which format your system supports, and if a movie in your queue is available in that format, that's the disc that will be shipped to you. (Go the the Help Center and search on the keyword "blu-ray".)
Unless the DRM situation with these things changes drastically (for the better, that is), I wish them both death by a thousand stalemates.
Even if that comes to pass, don't bet on the big players seeing DRM as a major factor in the formats' demise. However, if they watch a boatload of R&D capital go down the drain while outlets of unencumbered content (e.g. mp3tunes.com and emusic.com) gain market share, who knows - perhaps a light could go on somewhere, or perhaps a foundation or open consortium could spawn an *open* storage format & device / communication spec that DRM-bent interests don't control.
The funding obstacle to this is monumental to be sure, but the most likely way to put a stake in DRM would probably be for an open standard for HDTV devices (storage, communication, playback) to gain traction in consumer devices. Sure, they wouldn't work with HDCP / 5C content, but that's the point. A third of the commercial devices won't interoperate either, given the bugginess of so many implementations. Utopia would be to see something like an EFF branded HD PVR, with open licensed blueprints allowing free manufacture thereupon on the condition that no DRM of any kind be enabled.
Pi Ran Out
HD-DVD/Blu-ray is just not worth it in my opinion. I have a 50" Sony HDTV and an upconverting DVD player and I am very pleased with the picture. I was at an electronics store watching The Last Samurai on a good sized TV for nearly twenty minutes before a salesman asked me what I thought of the new HD-DVD format. I was completely underwhelmed and didn't even realize I was watching an HD version of the film until the salesman told me. With players that cost C$700 and movies that are over C$35 each it just doesn't make economic sense to me.
I think both HD-DVD and Blu-ray are a bust.
they seem to be listing the full retail cost for the memory module. Why would toshiba be paying retail price on anything in the unit? wouldn't they be buying wholesale? if all their numbers are off, that's up to a 30% inaccurate estimate for the price of the parts. which takes away most of the 'so called loss lead per unit'
anyways, they could be taking a loss per unit, but i am really skeptical about the numbers being given in the parent article.
https://www.gnu.org/philosophy/free-sw.html
Boy, are you misinformed.
The only difference there is spindle speed, 1.2:1 difference to be exact, DVD+R to DVD-R. The underlying technology and interface are exactly the same beyond that.
Wrong. There are significant differences in tracking, linking, and error management.
HD-DVD uses a standard red laser operating at a much lower wavelength of light
Swing and a miss. Both Bul-ray and HD-DVD use a 405nm blue laser.
Beyond the cost for a blue laser system, you then have to support two dual chip sets for processing HD-DVDs and Blu-Ray discs because of the completely different DRM standards being used.
Nope. Both Blu-ray and HD-DVD use AACS.
And yes, this is hardware decoded in consumer devices so you're talking about quite a cost if you wanted to build custom ASICs to do both in one chipset, in licensing fees alone!
You clearly don't understand the IC market very well. There are ASICs that handle the vast majority of the needs for a DVD player, including drive servo / spindle control, MPEG2 decoding, multiple different audio formats (MP2/AC3/DTS, often MP3 and WMA as well), video scaling, OSD generation, and, in many cases, even incorporate a microcontroller.
Extreme integration is very common for a market this size.