Is Toshiba Giving Away The Razor To Get You To Buy The Blades?
If you're thinking of buying an HD DVD player, you might want to wait a week or so. — I just received an e-mail tonight from the folks at the EMA (Electronic Merchant's Association), who are responsible for a big industry event next week, the Home Media Expo.
Context & Ripple Effects
This rumor lands on top of an escalating discounting pattern: back in May, Toshiba was already trying to move players with a $100 rebate on HD DVD decks, and Business Week's June piece argued the format war could leave both sides losing money. A deeper price slash ahead of next week's EMA-run Home Media Expo would push that logic further.
The framing circulating is explicitly razor-and-blades — sell the player near cost, make it up on discs — which matters because the HD DVD camp's economics would then rest entirely on attach rates rather than hardware margin. The confirmed backdrop is real: the Electronic Merchant's Association's Home Media Expo opens within days, a natural stage for a pricing announcement.
First-order effects
- Buyers considering an HD DVD player face a direct wait-or-buy decision: if the rumored Toshiba price cut lands at the Expo, anyone purchasing this week overpays relative to the new floor.
- Retailers holding current HD DVD inventory take an immediate margin hit — existing stock bought at wholesale competes against whatever discounted pricing Toshiba announces.
Second-order effects
- The Blu-ray camp faces pressure to respond with matching discounts or bundles of its own, turning player pricing into a tit-for-tat spiral where neither side can hold hardware margins.
- Disc publishers gain leverage inside each camp: with players as loss leaders, exclusive titles become the differentiator that justifies a consumer's hardware choice.
Third-order effects
- If razor-and-blades becomes the standing playbook, the format war shifts from a spec contest to a cash-burn contest decided by disc attach rates and studio exclusives — consistent with Business Week's warning that both formats could bleed out before one concedes.
- Sustained below-cost hardware pricing sets a template for how consumer electronics companies fight future media-format transitions: subsidize adoption hardware to control the software channel.
The trend: High-definition disc formats are entering a subsidy-driven land-grab phase, with hardware sold as bait for recurring disc revenue.