Toshiba is taking up a somewhat common practice in today's cut-throat electronic scene. They are selling the HD-A1 at a large loss like Microsoft and Sony do on their game system. The HD-A1 sells for $499 but marketing firm iSuppli estimates that it costs more the $700 when packaging and manufacturing is added to the $674 cost of parts. But this is what Toshiba felt was needed to undercut Sony and Blu-ray. Don't forget though that they are making money on the discs themselves too. They own the license to the format so when ever someone buys a HD DVD film, they are making money. It might not be as much as a $1,000 Blu-ray player but it is still money.