Gizmodo reports Toshiba losing approximately $500 per A2 sold at $99

[Whyser]

http://gizmodo.com/gadgets/format-wa...500-319172.php

You might have heard about those $99 HD DVD players that were being sold for a moment at Walmart and Best Buy. You're probably smart enough to realize that Toshiba isn't making much scratch on these things, but for reference, the first HD-A1 HD DVD player, cost Toshiba $674 in parts alone (Says iSuppli, 2006). So are they losing ~$500 bucks on these newer player selling for less than a C-note?

Within a calendar year, I very much doubt that it could have been price-optimized more than 30% (*number pulled out of thin air). Either way, it's pretty clear that Toshiba is losing at least a few hundred dollars on this $99 deal for consumers, and maybe over $500 bucks including all costs. Is this sale desperation? Or have they moved on from the early-adopter battle field and straight into the Waterloo of mainstream buyers? Maybe it's just a stunt, since most places sold out almost immediately. What better way to win the hearts and minds of cheap Americans than to hold an insane sale on a sliver of all of your inventory?

I guess I can see why the BDA isn't all that worried... this isn't sustainable at all... though I wonder, how much manufacturing costs have gone done since they last did the survey?

And how many A2s are there for sale anyways? Most ppl are reporting them to be sold out or didn't even stock any at all.

[WickyWoo]

There were 50,000 A2s

And they had build dates almost a year old

A friend who bought one says his was made in NOVEMBER 2006

This was a firesale for unsold inventory, plain and simple. The build dates prove it.

[Whyser]

So let's do some math here...

50,000 A2s x $500 loss = $25,000,000

Wow, so Toshiba is taking a 25 MILLION dollar hit for this firesale?! And like the article says, that's NOT including things like storage/shipping/etc.

[aphex]

Originally Posted by Whyser

So let's do some math here...

50,000 A2s x $500 loss = $25,000,000

Wow, so Toshiba is taking a 25 MILLION dollar hit for this firesale?! And like the article says, that's NOT including things like storage/shipping/etc.

That's not how it works

50,000 A2's x 600 = 30,000,000 loss.

They couldn't sell em and they were out 30 mil so they said, "**** it, sell him for 100 bucks so we can prevent going bankrupt"

Specially since they probably made a ton of their newer players which cost even more to make. They basically just made 5 million, which probably doesn't close to cover what they're spending on hddvd(ads, bribes, players)

I really HOPE they go bankrupt. That'd be hilarious.

[Nicadian]

That is just in the player, plus the 7 movies.

[Deane Johnson]

They obviously lost money on these things, but $500 isn't believable. I don't know anything about the blog that's reporting this, but many things on blogs turn out to be a lot of BS.

Keep in mind, Toshiba didn't get the $98. They reportedly sold them to Wal-Mart for $50 each.

Makes me wonder, however, how much money Toshiba is willing to throw down this rat hole before they decide enough is enough.

[Seretur]

And to think that some forums reported this to be a current model with unlimited supply.

Bill Hunt was right -- they sold all this stock out just so they can reach their projected sales figures. After they downsized them, what, twice this year.

Of course, Bill got his site hacked for his efforts.

This is the beauty of the situation: there's literally nothing more the HD DVD camp can do from now until Christmas (except sell their two remaining blockbuster discs at full price). They gave Transformers a ridiculously early release, and they gave their players away at huge losses. Nothing they can do on Black Friday -- short of giving all their movies away for $5 a pop -- can have the same potential effect. And there's still a full month and a half of Christmas shopping ahead for the US buyer.

I'm pretty certain the BDA is watching all of this with an air of cold amusement as they time the rollout of their truly big guns.

Let's just hope LeoneFan's nerves hold.

[Whyser]

Originally Posted by Deane Johnson

They obviously lost money on these things, but $500 isn't believable. I don't know anything about the blog that's reporting this, but many things on blogs turn out to be a lot of BS.

Keep in mind, Toshiba didn't get the $98. They reportedly sold them to Wal-Mart for $50 each.

Makes me wonder, however, how much money Toshiba is willing to throw down this rat hole before they decide enough is enough.

Here's another site stating that iSuppli calculates the parts needed to build an HD DVD player is $674 as of approximately June 2006, and it states that it doesn't include the cost of assembly, packaging, peripherals, distribution, advertising, software development, etc.

http://www.reghardware.co.uk/2006/06...layer_subsidy/

Even if the cost of the parts were cheaper come November, I don't think $500 is too far off the mark.

[MotionBlurr]

I know last year they said Sony was losing a few hundred on every PS3 sold. But they make about $10 back for every game sold by a 3rd party and maybe $20 back for a game made by one of their own developers. I don't think Toshiba is making back more than a $1.00 for every HD-DVD sold.

[Spankey]

Even better is the fact that Toshiba decided to firesale these things just so the loss wasn't more than $25 mil. Attach rates my ass. The format stinks and the only people that want it are XBox fanboys and people who became early adopters and couldn't really afford to be.

[sj001]

Originally Posted by aphex

That's not how it works

50,000 A2's x 600 = 30,000,000 loss.

They couldn't sell em and they were out 30 mil so they said, "**** it, sell him for 100 bucks so we can prevent going bankrupt"

Specially since they probably made a ton of their newer players which cost even more to make. They basically just made 5 million, which probably doesn't close to cover what they're spending on hddvd(ads, bribes, players)

I really HOPE they go bankrupt. That'd be hilarious.

The big question is just how long will this company's shareholders allow them to bleed until they decide to pull the plug on the whole thing? Hopefully sometime damn soon!

[Deane Johnson]

Whyser and Motion Blur, perhaps these figures are correct, but they are sure hard to believe. If so, I should think Toshiba would be ready to throw in the towel for sure. They can never do enough to make the format viable.

I believe it was Bill Hunt who said that the old fighter pilot axiom was that when you dive for the deck, you soon run out of maneuvering room. I'd call this below the deck.

[darinp2]

Originally Posted by Deane Johnson

They obviously lost money on these things, but $500 isn't believable.

I mostly agree. The HD-A1 is basically a computer. I think the HD-A2 probably cost quite a bit less to manufacture.

On the other hand, given how old these are I wonder if Toshiba planned on manufacturing x amount per month and had to reduce that significantly when they didn't sell at near that. Things like that can cause large costs, depending on how contracts are done and things. On the other hand, those costs may have already been incurred, so Toshiba may have felt that the only reasonable option was to lower these now.

BTW: I also believe that the HD-A3 has a lower manufacturing cost than the HD-A2, but don't know how much lower.

--Darin

[daisuke149]

well if they losing that much money.. :-p i guess i hurt them by buying one lol and not planning to ever pick up a hd dvd.

[WickyWoo]

Here's another site stating that iSuppli calculates the parts needed to build an HD DVD player is $674 as of approximately June 2006, and it states that it doesn't include the cost of assembly, packaging, peripherals, distribution, advertising, software development, etc.

Those figures are on the A1. The A2, best figures I've seen are somewhere between $325-350 to build including business expenses, not counting storing them for a year

[Manco]

I'm shocked. Utterly shocked.

[Deane Johnson]

Do any of these figures include an amortization of the bribes paid out to the likes of Paramount?

[Esox50]

A $25MM "loss", while it may seem huge to some people, is really not a big deal. These companies are moving around Millions, and in some cases, Billions, every day.

If these are all old build date players, then the production of said players was a sunk cost anyway...

I agree with the person who said that the beauty of this is that HD DVD is just about out of options right now.

Given the Hollywood Reporter article from last week, I firmly believe that behind the scenes HD DVD has been given an ultimatum by WB. That is, sh!t or get off the pot...otherwise we'll make the choice for you (and go Blu).

For the record, I don't believe these players cost $600 to make...

[sydney]

anyone have stock in toshiba? i would like to know hwo its doing right now

[krispydude]

25 mil is nothing for toshiba. its better to take the loss from the firesale and have the potential to reach more people and get them into HD DVD than let them rot in warehouses.