iSuppli Corporation, an independent market research firm took a closer look at Toshiba’s HD-DVD players recently to see not only what’s inside but to find out how much production costs for these units actually add up to. The result is hardly surprising and underscores my previous points about the HD-A1 and HD-XA1 being a prototypes even more.

According to iSuppli’s report, which can be found here, the total manufacturing cost of the player is in their estimation over $700, which means that Toshiba is most likely losing about $200+ on every player they sell. However, there are some caveats to this report, because iSuppli does not indicate where these numbers come from and it is dubious at best whether their estimated costs of goods do indeed reflect Toshiba’s actual costs in any way.

Nonetheless, it seems to underscore that Toshiba was dead-set on going to market at any cost, and it also explains why after the initial shipment of hardware – which allowed them to take home the title of “first in market” over its competitor Blu-Ray – Toshiba showed no real interest in filling sales channels. According to some of our retail sources, Toshiba in fact discouraged retailers from placing additional orders or wouldn’t even accept restocking orders.

As I pointed out previously, these first generation HD-DVD players are slapped together prototypes that were not integrated in any way and were simply a way to get the format to market. Since these are essentially PC computers with some firmware running one them one really has to wonder, exactly what Toshiba was doing in the past 2 years since showing the first HD-DVD prototypes at CES. But that’s a different story altogether.

Either way it seems apparent that Toshiba is working had to create players at this stage that use higher integrated chipsets with custom functionality in order to bring costs down. While it may be a nice chip on their shoulder to have been first in the market, this credit won’t last long, especially if they cannot fill sales channels any time soon before consumer demand fizzles out.

Too few people in this industry seem to understand that high definition video formats do not sell themselves. There are still companies out there who believe they don’t even have to get their HD-DVD or Blu-Ray product reviewed or publicly promoted. Ignorance may be a bliss but when it affects the bottom line, eventually stockholders will have to say something about it, whether that company is called Toshiba, Lions Gate or Samsung.