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Toshiba gets jolt of HD DVD reality

Toshiba has cut its sales forecast for HD DVD player sales by 44 percent.

Toshiba was forced to cut its sales forecast for its HD DVD players. Toshiba

You've heard the expression "underpromise, overdeliver." Well, Toshiba execs are getting a little taste of "overpromise, underdeliver" when it comes to sales of HD DVD players.

According to a Reuters report today, "The Japanese electronics group now expects to sell 1 million next-generation optical disc players and recorders in North America by the end of calendar 2007, down 44 percent from its previous estimate of 1.8 million unit sales." Toshiba's also pulling back on its projection of selling 3 million units of HD DVD players and recorders worldwide by the end of the business year to March 2008, though smartly, execs shied away from giving any new estimates.

While the overall sales numbers haven't been great for HD DVD players, the more ominous number may be the figure buried at the end of the story. Toshiba reported that "More than 60 percent of all dedicated next-generation DVD players sold in North America used the HD DVD format as of the end of May." That's not counting PS3 sales--and that's really not good, considering standalone Blu-ray players cost a couple hundred bucks more than HD DVD players and seem like a stupid purchase with the PS3 out there at basically the same price. True, this month Toshiba got a lift after lowering the price on its entry-level HD DVD player to $299. But that's gotta put a real squeeze on margins. We're talking zero.

No one's throwing in the towel yet, but the real question is just how much money is Toshiba willing to lose to try to win. Anybody got an estimate?