Yesterday, Toshiba literally rolled out a red carpet for press and analysts. The carpet was on the sidewalk leading to the entrance of the Tribeca Cinemas Gallery in New York, and the occasion was Toshiba’s Summer Press Event, where new products - and the company line - are presented to a press and analyst corps presumably made compliant with good food and strong spirits.

Ken Werner
Senior Analyst and Editor

It didn’t work. Although Toshiba has a very strong story to tell - and we’ll get to it momentarily - it took only a few moments for the press corps to focus on what wasn’t being shown, and that was rear-projection television (RPTV). Although it wasn’t easy to get straight answers out of a very pleasant but clearly uncomfortable Toshiba representative, it seems that Toshiba will not be introducing any new RPTV models. However, its existing models of 50-, 57- and 65-inch DLP RPTVs will remain available for the time being. With MSRPs of $1199.99, $1699.99 and $2199.99, the RPTVs are being sold on price in a shrinking market, and Toshiba is clearly rethinking its previous down-in-the-mud pricing strategy. (As I write this, the 50-inch is available from a reputable on-line retailer for well under $1000 with free shipping.)

What Toshiba had really rolled out the red carpet for was its expanded line-up of Regza LCD-TVs and, even more, its HD DVD players. Indeed, most of the formal presentation, appropriately made in one of the Tribeca Cinemas’ theaters, was about HD DVD, and Toshiba was genuinely enthusiastic. But why? In the previous chapter of the HD DVD / Blu-ray format war, Best Buy had decided to carry only the Blu-ray versions of high-definition movies. That would seem to be a painful blow to HD DVD.

But, as we soon learned from Jodi Sally, Marketing VP for the Digital A/V Division, HD DVD now has a 70% market share, helped no doubt by Toshiba’s including five free movies with the purchase of each HD DVD player.

Toshiba has gotten what Sony has not: that the magic price for making HD DVD a mass-market item is $299. So Toshiba has been pushing affordability. A recent promotion has deducted $100 from the price of each player purchased with a Regza TV. And it’s worked. Sally said the sell-through of players in Q2 increased 200% relative to Q1. That’s consistent with what consumers say. In a survey this spring, 60% said HD players were too expensive, only 9% cared about the format war.

Having found a winning strategy, Toshiba is pushing ahead with it. Effective July 1, the previously promotional pricing of $299 for the 720p HD-A2 and $399 for the considerably more capable 1080p HD-A20 become permanent.

Although they weren’t discussed much in the formal comments, Toshiba was showing an impressive assortment of Regza LCD-TVs in three lines. HD sets are available now in sizes from 26 to 42 inches at MSRPs from $799.99 to $1399.99. Versions of the 26 and 32 are available with a built-in slot-loading DVD player with internal up-conversion for an additional $100.

So how’s all this working? The press corps was clearly impressed with the way these sets looked. From a marketing perspective, Toshiba’s LCD share in the 32-to-42-inch range grew 90% from April to May to a 10.8% share, according to NPD data. That made Toshiba Number 3 in the segment.

Toshiba is doing a good job of pulling away from its old reputation as a supplier of cheap CRT-TVs to Wal-mart. The red carpet on Laight Street was laid out for the Press, but maybe Toshiba’s marketing and product team figured they deserved it, too.

Note: an expanded version of this article will appear in the July issue of Projection Monthly with Flat Panel Coverage.