Toshiba is losing at least $200 (£110) on each sale of its HD-A1 HD-DVD player, according to electronics industry analysts iSuppli. 

The components alone cost around $674 (£370), said iSuppli, significantly more than the retail price of between $447 and $549.

Testing, cables, remote control and packaging are reckoned to push Toshiba's cost to more than $700 (£385) per machine.

ISuppli concluded that Toshiba is buying its way into the market. Blu-ray, HD-DVD's big rival in the next-generation DVD format wars, is comparatively expensive, with the new BD-P1000 Blu-ray DVD player from Samsung retailing at $999 (£540). 

"It's unusual to find this level of subsidisation outside the games console and mobile phone markets," said Chris Crotty, senior analyst for consumer electronics at iSuppli.
"Presumably, Toshiba anticipates making back any initial HD-A1 losses with subsequent products.

"There is little question that Toshiba had to use a high-cost design for its first model. But there is a big question as to whether pricing its player so much less than Blu-ray is worth the financial risk."

ISuppli forecasts that factory shipments of all high-definition DVD equipment, both HD DVD and Blu-ray, will rise from 1.6 million units in 2006 to 65 million in 2010.