Tearing down the Toshiba player...

[marzetta7]

Interesting read...

http://www.eetimes.com/news/semi/sho...leID=189600999

[JTK]

Originally Posted by marzetta7

Interesting read...

http://www.eetimes.com/news/semi/sho...leID=189600999

It pretty much describes what a lot of us have suspected/expected: A desperate hail mary pass that...thus far...ain't doin' half bad!


Here's the throwaway tag line of the entire article though and it's a line of thought that I'm starting to warm to myself:

"This is not a repeat of VHS vs. Beta," Crotty said. "The market dynamics are very different. The most likely outcome is stalemate, with the savvy manufacturers introducing dual-format players as early as the 2006 holiday season."

[Blu-rayrules]

Figures... As soon as blu-ray gets going. Toshiba is in trouble.

According to iSuppli's teardown analysis, bill-of-materials (BOM) costs for Toshiba's HD-A1 HD DVD total an estimated $674, far exceeding the unit's $499 U.S. retail price. The estimated BOM figure excludes costs for manufacturing, testing, cables, remote control and packaging—costs that could easily push the total cost of each unit to more than $700, iSuppli (El Segundo, Calif.) said.

They are going to lose some money.

[JTK]

http://www.extremetech.com/article2/...1980865,00.asp

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





They're already losing money. I think this is nuts if these figures are even remotely accurate.

You can't do business this way long term and expect success and to survive.



I DO salute them for being aggressive and kicking the door down, but...you can see where this quickly becomes a dubious prospect for them.

Watch:

Ballpark math: Toshiba is losing about $200 per player.

This isn't the videogame console world where the old theory of "Lose money on hardware- make it up on software sales" can work for them.

The only way that even works in videogames is if you are the dominant market leader.

Granted, a lot of things can change between now and within the next year, but as it stands, this is what I see:


Toshiba seems to be digging their own grave by selling players for $200 dollars less than the cost to build them.

The only way Toshiba can ever make any money from this is for other people to build the players and send Toshiba the royalty checks. As it stands now and in the near future, just who is Toshiba going to talk into doing that for them? Even the Chinese companies are gun shy after the bloodbath that happened with DVD players. They're not stupid enough the jump on the 'DVD Part Deux" HD-DVD bandwagon to the poor house without reason.

Why else do you all think that CE support for HD-DVD is almost non-existent?

It's all starting to make a lot more sense now.

Toshiba has bet the farm on HD-DVD. Only the big wallet of Microsoft has allowed them to get away with this for even this long.

HD-DVD MUST be a boooming successs and FAST for this boat to not sink like the Titanic.

If the BDA continues to underachieve and shoot themselves in the foot, like they have with the early disc releases and the Samsung player...nothing's impossible.

But I think the real, full fledged BR launch that's going to happen in October is going to be something different entirely. It had damned well better be.




No venture running under this kind of financial cycle and business auspice...coming off of debacles like IFA 2005 and CES 2006 has any businesss surviving for as long as HD-DVD has. You can thank Microsoft for that and you can also thank the BDA for needlessly fumbling the ball in the early goings.


Maybe MS is subsidizing that $200 gulf per player themselves.

That would be easiest answer to all of this by far, and why you read such steadfast zealotry for HD-DVD from any Microsoft employee in the press, on forums, you name it.

^^ Stockholders ain't going to like any of that.

[hmurchison]

Ummmmm what do you think Sony's gonna be doing with the PS3? They'll be losing money on every unit as well. Sometimes that is what you have to do. Component costs aren't static either as larger orders are placed the price generally goes down. I don't expect Toshiba to make a profit but I do do expect that they'll ride out the losses until cheaper (BOM) 2nd gen units are ready early next year.

The "digging grave" stuff is hypebole. Toshiba isn't some johnny come lately. They can finance a loss for 6 months on HD DVD. Format wars are about licensing. Licensing media, asics you name it. There is a pot of gold at the end of the tunnel or Sony and Toshiba wouldn't be going through this.

[The Don]

Originally Posted by hmurchison

Ummmmm what do you think Sony's gonna be doing with the PS3? They'll be losing money on every unit as well. Sometimes that is what you have to do. Component costs aren't static either as larger orders are placed the price generally goes down. I don't expect Toshiba to make a profit but I do do expect that they'll ride out the losses until cheaper (BOM) 2nd gen units are ready early next year.

The "digging grave" stuff is hypebole. Toshiba isn't some johnny come lately. They can finance a loss for 6 months on HD DVD. Format wars are about licensing. Licensing media, asics you name it. There is a pot of gold at the end of the tunnel or Sony and Toshiba wouldn't be going through this.

agreed...and I am wondering...does Toshiba make anything off the HD DVD's that are sold?....that would explain why they would make such a ballsy move...

and I'd imagine they make money off their re-packaged RCA models and what-not....plus if BD fails...wouldn't they have to pay Toshiba a royalty to make a HD-DVD player, switching sides?

[JTK]

Originally Posted by hmurchison

Ummmmm what do you think Sony's gonna be doing with the PS3? They'll be losing money on every unit as well. Sometimes that is what you have to do. Component costs aren't static either as larger orders are placed the price generally goes down. I don't expect Toshiba to make a profit but I do do expect that they'll ride out the losses until cheaper (BOM) 2nd gen units are ready early next year.

The "digging grave" stuff is hypebole. Toshiba isn't some johnny come lately. They can finance a loss for 6 months on HD DVD. Format wars are about licensing. Licensing media, asics you name it. There is a pot of gold at the end of the tunnel or Sony and Toshiba wouldn't be going through this.

Given your well known past of sheer Blu-Ray and Sony bashing here and at AVS, I'm forced to ask:

What would your response be if those articles were talking about a BDA related company, or especially Sony, instead of Toshiba or any HD-DVD related company?

I think I know the answer.



My response to you is very simple:

If the numbers are even remotely in the ballpark...this is an absurd business model.

Indeed, in a business context, "not making a profit" is the very textbook definition of "digging one's own grave." Couldn't be less hyperbolic or more truthful.


Business is about making profit. If you're not doing that, you're failing. Something is wrong. That's common sense.


I think it's almost a certainty that Microsoft would HAVE to be bailing them out and making up the difference, out of pocket, on the sale of each HD-DVD player. That's the only way this madness could even hold up as long as it has. That's how HD-DVD even survived past the debacles of IFA 2005 and CES 2006.

This nonsense certainly can't hold hold up if the BDA gets their act together and starts firing nukes come October.



As far as these comparisons to the videogame market go? They couldn't be more inapplicable or different from one another.

First off: Sony can produce first party software on both the movie front and games' front, with specific studios.

Toshiba doesn't have any assets like that.

What more needs to be said, really?


But anyways:

I didn't necessarily agree with everything in the Audioholics' "10 reasons why HD format have already failed" editorial, but I certainly did agree with this point and I'm going to quote it here since I think it covers the entire gambit here succinctly and simply:

Format Wars Don’t Sell Players


The only reason Sony’s Playstation, Microsoft’s Xbox and the Nintendo GameCube can sell so well simultaneously is because of the prevalence of excellent software titles.

People want to buy the hardware just so they can play the software.

This is not a format war – it is choice, just like Chevy and Ford (and just like the gaming systems, some people have one of each).


The high definition DVD formats, however are really just the same source material packaged in two different wrappers- not to provide choice, mind you, but because the two camps simply are too greedy to combine forces, and not innovative enough to drive two truly separate products successfully.


Take careful note – a format war is NOT competition, it is a hindrance and the bane of high definition DVDs.

I couldn't agree with this more and I daresay I think one would be hard pressed to come up with any concrete refutation to anything I've posted in thist thread thus far.

[hmurchison]

What would your response be if those articles were talking about a BDA related company, or especially Sony, instead of Toshiba or any HD-DVD related company?

Look at the specs of the PS3 and tell me that device isn't going to be underwater as well. A Cell proc, hard drive, Blu-Ray drive and assorted asics. I've heard people talk about Toshiba as if they are some Tier 2 company teetering on the brink of bankruptcy. Those of us that sell computers for a living know Toshiba's hard drive business is thriving and that their talents for working with optical may be second only to Sony. Who do you think designed the optical disc for DVD and now HD DVD (called AOD by Tosh). I just get a kick reading posts that allude that Toshiba cannot withstand losing a couple hundred a player for half a year or so.

I think it's almost a certainty that Microsoft would HAVE to be bailing them out and making up the difference, out of pocket, on the sale of each HD-DVD player. That's the only way this madness could even hold up as long as it has. That's how HD-DVD even survived past the debacles of IFA 2005 and CES 2006.

Microsoft isn't some charity here to bail companies out. If MS does any bailing out it will be to subsidize the HD DVD player for the Xbox 360. They have nothing to do with the current Toshiba and RCA STB. From my point of view CES 2006 was a success for HD DVD. Everyone thought that this would be the end of HD DVD and what they saw were a bunch of mockups of BD player that were playing video from a drive of some sort. Amir ejected the disc in the players at CES 06 and the movies kept playing. That's rather shiesty.

Yes I agree Sony gets more royalties from owning and licensing the disc format and the movies. However I'm sure Toshiba's going to do just fine and Sony will do just fine as well.

There really is room for both.

[Psiweaver]

There will be both for as long as there are content providers willing to be exlusive as soon as someone can get all the content released in great quality on its format the war will be over.

[The Don]

Originally Posted by hmurchison

Look at the specs of the PS3 and tell me that device isn't going to be underwater as well. A Cell proc, hard drive, Blu-Ray drive and assorted asics. I've heard people talk about Toshiba as if they are some Tier 2 company teetering on the brink of bankruptcy. Those of us that sell computers for a living know Toshiba's hard drive business is thriving and that their talents for working with optical may be second only to Sony. Who do you think designed the optical disc for DVD and now HD DVD (called AOD by Tosh). I just get a kick reading posts that allude that Toshiba cannot withstand losing a couple hundred a player for half a year or so.



Microsoft isn't some charity here to bail companies out. If MS does any bailing out it will be to subsidize the HD DVD player for the Xbox 360. They have nothing to do with the current Toshiba and RCA STB. From my point of view CES 2006 was a success for HD DVD. Everyone thought that this would be the end of HD DVD and what they saw were a bunch of mockups of BD player that were playing video from a drive of some sort. Amir ejected the disc in the players at CES 06 and the movies kept playing. That's rather shiesty.

Yes I agree Sony gets more royalties from owning and licensing the disc format and the movies. However I'm sure Toshiba's going to do just fine and Sony will do just fine as well.

There really is room for both.

but Toshiba doesn't own the royalties to the movies....Sony does a good chunk of their own and will be putting out plenty of movies that Toshibe will never get their hands on unless BD waives the white flag or they make a HD-DVD/BD combo....

I could care less who wins this...I want the best player available....I am pondering a HD-DVD purchase this week because I know someone who works at sears and can get me a 10% discount...

but how can we take you serious when you come off obviously biased....?

[Psiweaver]

Toshiba can run for a while whilst losing money but since they won't be earning much in the way of royalties from the hd dvd pressing it'll be something that they can't keep up in the long run unless they can push the costs down by buying in large volume

[DaDane]

O.k. so Toshiba is losing money now, - but as said, if the format wins (or even stays if we get the stale-mate scenario) Toshiba are going to make quite some money from there patents, - if on the other hand they don't win they are going to make no money.

So they invest in the market. I guess that's not to stupid.

One thing to consider is that the HD DVD player we are talking about seem's to be a bit funny build anyway. Like build on a computer or something (according to EEtimes). I guess this is a last-minute desperate action. They wanted the player out first, - and they got it! The engineers are probably working day and night to do the 'right' player now, - and when they have it, Toshiba are going to sell a better product for the same price. And this time probably with zero loss or perhaps even a small win. But this product just wasn't ready in time. And contrary to Sony they decided that time was more important than the money and the quality.

Another thing to consider is that this is not the time for big volume. So even if they do loose quite a lot of money on each player, - they don't loose all that money, - cause they don't sell all that many players.

Time will tell who did the smarter move!

[hmurchison]

Originally Posted by The Don

but Toshiba doesn't own the royalties to the movies....Sony does a good chunk of their own and will be putting out plenty of movies that Toshibe will never get their hands on unless BD waives the white flag or they make a HD-DVD/BD combo....

I could care less who wins this...I want the best player available....I am pondering a HD-DVD purchase this week because I know someone who works at sears and can get me a 10% discount...

but how can we take you serious when you come off obviously biased....?

Everyone is biased. I make no bones about the fact that I will purchase a Blu-Ray player. However that doesn't mean I sit back and feel like I must let go of sensible thinking. In a way I think we've already seen the outcome of a format war. Lower pricing. We'd not have the option of $500 HD players if there weren't two competing formats. Our movie prices would likely be higher as well.

[zombie]

Originally Posted by hmurchison

In a way I think we've already seen the outcome of a format war. Lower pricing. We'd not have the option of $500 HD players if there weren't two competing formats. Our movie prices would likely be higher as well.

That's true. The movies of both formats are dirt cheap and the only reason there's a $500 HD DVD player is because Blu-ray exists. So yeah, the format war has actually done some good as well as some bad.

[JTK]

Originally Posted by nyg

That's true. The movies of both formats are dirt cheap and the only reason there's a $500 HD DVD player is because Blu-ray exists. So yeah, the format war has actually done some good as well as some bad.

True enough.

[The Don]

true....and the only reason I haven't purchased an HD-DVD player is due to the fact that last time I checked...and things could have changed by now....Disney isn't backing them and some of my favorite movies are under their sub-companies...or whatever they are called...

[zombie]

Originally Posted by The Don

true....and the only reason I haven't purchased an HD-DVD player is due to the fact that last time I checked...and things could have changed by now....Disney isn't backing them and some of my favorite movies are under their sub-companies...or whatever they are called...

There's a rumor going around that Pixar was disappointed with the reports of BD PQ and has pressured Disney into supporting HD DVD. Time will tell if this is true.

[The Don]

Originally Posted by nyg

There's a rumor going around that Pixar was disappointed with the reports of BD PQ and has pressured Disney into supporting HD DVD. Time will tell if this is true.

ouch....also...does Fox, MGM and Lionsgate still support BD only?...or am I misinformed?....

I still would hate the fact that the spider-man movies would be on BD only....

[JTK]

Originally Posted by nyg

There's a rumor going around that Pixar was disappointed with the reports of BD PQ and has pressured Disney into supporting HD DVD. Time will tell if this is true.

I'll believe it when I see it.

That would be a rash, panic decision on their part if they made any serious action this soon.

If October comes and goes and the situation doesn't improve...THEN I could possibly see some fluidity happening in terms of who is holding what position.

[zombie]

Originally Posted by The Don

ouch....also...does Fox, MGM and Lionsgate still support BD only?...or am I misinformed?....

Yes that's correct but I expect an announcement from Lions Gate very soon stating that they'll be supporting HD DVD as well.