We've long wondered how Toshiba's able to price its HD-A1 HD DVD player at $500 while the Blu-ray camp will be charging $1,000 and up for their next-gen machines, and now the eggheads over at iSuppli are claiming to have the answer. After furiously running all the numbers through their high-tech calculators, the same company that brought us breakdowns of the iPod nano and Xbox 360 production costs is estimating that it takes $674 worth of parts to build an HD-A1 -- bringing the total cost to well over $700 when you include labor, packaging, etc. -- which means that Toshiba is taking a $200 loss on each unit sold. Rarely seen outside the world of videogame hardware, this pricing strategy is usually employed to build up a customer base for the devices' highly-profitable software, but in Toshiba's case, achieving significant HD DVD penetration prior to the Blu-ray rollout was probably even more important than the few bucks they make from each HD DVD disc that gets sold. Unfortunately for those of us waiting on a burner to hit the market before making the HD optical plunge, it doesn't sound like Toshiba will also be willing take a loss on that RD-A1 introduced the other day, as its $3,400 pricetag seems to more than cover every little component they're stuffing in there.

[Via HDBeat]

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Toshiba taking $200 loss on each HD-A1, sez iSuppli