HD DVD price cuts - Fire sale or an attempt to keep the format alive?

Is it a case of "Buy! Buy HD DVD!" of "Bye bye HD DVD"?

Is it a case of "Buy!  Buy HD DVD!" of "Bye bye HD DVD"?

Yesterday we saw Toshiba dramatically drop the price of HD DVD hardware and software - is this a fire sale or is Toshiba fighting to keep the format alive?

Dropping the price might make HD DVD seem attractive in the short term, especially for those looking to complement an HD TV with an HD player.  But the sudden and dramatic price drops so soon after the announcement by Warner that it was backing Blu-ray and the canceled press conferences at CES, it's hard to look at this move as anything other than Toshiba trying to offload existing inventory.  This means that consumers buying a cheap player should probably stock up on HD DVD discs too.  If HD DVD does go the way of the dinosaur or the dodo you end up with a player that'll continue to work with both HD DVD, and you get the benefits of upscaled DVD (although there's cheaper ways of doing this).  However, if you want a cheap HD player, and a good DVD upscaler, this might be a deal for you.

The other possibility is that Toshiba might be getting ready for an entrenched price war.  Flood the market with plenty of players and studios might change their minds about backing only Blu-ray.  The only problem with this move is that it would seriously impact Toshiba's bottom line and if they're planning a price war, the result could depend on how long the company is willing to lose money.

Personally, I'd take a step back and wait for the dust to settle before buying anything.