Originally Posted by Kosty
There is a method to the madness.
First off, Toshiba benefits if the HD DVD format goes mainstream. If it does, Toshiba cannot by itself manufacture enough players to meet the demand. Toshiba would love it if it can sell all the units it can produce (situation as of now) and get royalties from other sold HD DVD players.
Next thing is the marketing principle that an established brand has equity in it and that there is a brand premium that some people will pay more for the same item produced by a brand name manufacturer. Loyalty, previous experience, reduction of risk, better customer support. etc. is worth something for those people. That's a lot of AVSrs. We are willing to pay a bit of a premium for those items. But for many people buying a store no name branded item. like from Wal-Mart, Target, K-Mart. Costco, Sam's Club or another major retailer, the retailer takes the place of the brand with easy return policies, and past experiences.
HD DVD has the advantage of a coherent pricing strategy. Toshiba sales will benefit even if they are (and probably will) be sold side by side with a store brand player. Some people will pay a premium for the brand.
As a matter of fact. Toshiba HD A2 sales will probably increase if there are a lower cost unbranded player being sold $100 less right beside them. First off, the cheaper player may generate interest , but some people may consider them, and then say OK I can buy that. Then they look at the Toshiba for $100 more, decision already made to buy the $199 player and say to themselves, hey I can get the Toshiba for only $100 more. I can do that. Once the purchase decision is made for the lower item, its almost a sunk cost in the consumers mind, and the price of the branded item is perceived to be only the upgrade price.
This may be the pricing structure by fall.
$149 - $199 Xbox 360 add on (need Xbox 360)
$179 - $199 Chinese SoC players (Fuh Yuan, Alcoa, etc.) (1080i)
$249 - $299 Toshiba HD A2 (1080i brand name)
$349 - $399 Toshiba HD A20 (1080p)
$479 - $549 Toshiba HD XA2 (1080p, Reon CV, maybe 1080p24)
$799 - $999 Samsung and LG Dual HD DVD Blu-ray Players (play both formats)
$999 - $1199 Merdian / Onkyo high end HD DVD or Dual HD DVD Blu-ray Players
At every price point you add some increased feature or go to a more premium brand name. That's a coherent pricing stepladder which allows consumers to balance price and performance and brand equity.
Compare that to Blu-ray's price and performance and specification chartings, with the PS3 coming in and attracting a lot of first adopters, and HD DVD's stand alone pricing is coherent to consumers.
And HD DVD player pricing is dropping steadily for all levels .
And its lower than Blu-rays.
That is an advantage for HD DVD.