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HD DVD: Toshiba Fires Back?

January 17, 2008 | Author: Ibex Marketing

On Monday, Toshiba announced deep price cuts on their newest HD DVD players. It’s impossible to separate this action from the bombshell that Warner Brothers dropped 10 days earlier when it announced that it was going exclusive with the Blu-ray format for its high definition disc releases, starting in May. The Toshiba press release cited some interesting statistics about the hi-def DVD format market. According to Toshiba, HD DVD had about a 50% market share in 2007 (it’s not clear if they are talking about players or discs). And for the fourth quarter of 2007, HD DVD had more than an 80% share of the sale of notebook computers with hi-def DVD drives. Granted, that’s probably a very small number of units. This may be more of a sign of the preference for Toshiba notebooks over Sony models rather than an endorsement of HD DVD over Blu-ray in the IT world.

The new prices extend HD DVD’s price advantage over Blu-ray. According to the press release, the new suggested retail prices are: the entry-model HD-A3, $149.99; the HD-A30 with 1080p output, $199.99; and the high-end HD-A35, $299.99.

So why did Toshiba make these cuts? The optimist would say that the company is tightening its belt and getting ready to fight even harder for market share so that it can convince some of the major movie studios to switch to the HD DVD format. This is plausible; if the Warner Brothers announcement does anything, it demonstrates that the allegience of the movie studios is not carved in stone. The pessimist would say that Toshiba has decided that if HD DVD is going down, they are going to make the process as painful as possible for the Blu-Ray camp by forcing them to cut their prices as well. The cynic would say that Toshiba is trying to move its inventory of HD DVD players as fast as it can while there’s still a market for them.

And the technologist might decide not to buy any hi-def DVD player at all, and instead plan to sign up for a service such as the one announced by NetFlix that will let you download rented movies over the Internet, eliminating the need for discs entirely. (I’ll have more about the NetFlix offer tomorrow.)