Toshiba is so committed to the HD-DVD format's success that it has resorted to the "razor and blades" business model, according to an iSuppli report quoted on EE Times. The research firm's report says a "teardown" of the hardware inside the Toshiba HD-A1 HD-DVD player reveals estimated production costs of $674, and that's not counting in assembly, testing, packaging, and other added costs. Altogether, the HD-A1 is said to cost about $700 to produce, even though Toshiba is selling it for as little as $447 according to our price search engine. That means with each HD-A1 player sold, Toshiba could be losing over $250—an "unusual" level of subsidization outside the cell phone and game console markets, according to an iSuppli senior analyst.
This loss may however be due in part to an inefficient design, iSuppli suggests. The firm says the HD-A1 is "basically a combination of a low-end PC and a high-end DVD player," and that it even sports an Intel Pentium 4 processor instead of a cheaper, specialized CPU. The HD-A1's innards are also said to include $137's worth of decoders and programmable signal processing chips, as well as $125 of assorted memory chips including 1 GB of Hynix DRAM and a combined 288 MB of flash memory.
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