By Matthew Henry

SYDNEY: Toshiba today slashed the price of its base model HDDVD player to $499 after a $100 cash back and revealed that there will be further price cuts next quarter as the company seeks to win the mainstream consumer to the format.

Toshiba general manager, Mark Whittard, today told that he expects HDDVD to follow the pattern of DVD, which broke into the mass market when it reached the sub-$500 price point.

“I think hitting the sub-$500 price point is a milestone for HDDVD,” said Whittard.

“A few years back when DVD hit that price point, that is when the volume started to kick in. And with more price cuts coming in the next quarter, HDDVD players will start to replace DVD players even though the software may take a while to catch up, because consumers will get their DVDs upscaled to HD.”

Toshiba announced that its entry-level HD-E1 HDDVD player, which has 1080i or 720p video output, has dropped from RRP $799 to RRP $599, but consumers will be offered a $100 cashback via redemption bringing the perceived price to $499.

The mid-range HD-EP10 with full HD 1080p video has dropped in price from RRP $999 to RRP $799 and also has $100 cash back, bringing the price to $699.

The brand’s third player, the high-end HD-EX1, has also has the retail price slashed by $200 to RRP $1,299, but Toshiba will not offer cash back with this model.

The $100 cash back offer is a way of driving the format into the mainstream, said Whittard, and should help retailers drive up sales volume.

“An entry-level player at a sub-$500 price point will drive volume, how much remains to be seen,” said Whittard.

“There is never 100 per cent redemption on these cash back offers, it varies depending on how much is offered and the timing, but with $100 or less you would usually get 30 to 40 per cent of customers, maximum. It’s a great weapon for vendors to get the perceived street price down but you do get lots of customers forgetting. It’s a great way to stimulate sales for retailers.”

The price drops are a major challenge to Blu-ray, which is now around twice as expensive with Sony’s entry-level player priced at $999 and its base model PS3 with a Blu-ray drive priced a $699.

Whittard said cost effectiveness is one of the key strategic weapons for HDDVD in the market at the moment.

“HDDVD technology is cheaper to produce, the hardware is cheaper to manufacture and the software is too, so there’s a dual advantage of HDDVD. We’re the key hardware vendor supporting the technology so it’s our role to drive end-user demand and to do that we need to be aggressive,” he said.