The Register Hardware reports that Toshiba is likely sponsoring the first release of their HD-DVD players. According to a market watcher company Isuppli the company is selling the players below its cost price.

The market watcher said it expects the full cost of the HD-A1 to come in at over $700 a unit - over 40 per cent more than the consumers pays for it. ISuppli characterised this level of vendor subsidy as "unusual".

So why is Toshiba going to far, especially when rival Blu-ray Disc players cost around twice as much as the HD-A1? You can answer that question with just three letters, we'd say: PS3. The next-generation games console launches in November for $499 - or $599 if you want an HDMI port, Wi-Fi and an bigger hard disk. Sony's recent move to delay its own consumer Blu-ray Disc player to later October suggests it really wants folk to buy its games console, even if they only use it as a next-generation DVD player.