The massive influx of HD DVD players sold in the last month is what I guess he means. Maybe also the very high attachment rates of HD DVD versus Blu Ray.
I love seeing the Sony CEO backpedal. He's said so many idiotic things in the past year that who knows what he will say next. I think he's acknowledged a clear victory publically at least three times, and this demonstrates an obvious change.
I also agree that without the PS3, Sony would have another Beta and mini disc on their hands alrerady. I suspect they will soo anyway unless they change their tactics (ie: lower prices drastically).
Pat
It's interesting though, because the strategy of penetration pricing rarely works out the long run unless the company can afford to sustain that level of pricing. History has shown that price wars are silly- nobody wins in a price war except for the customer, and that's only in the short run. In a true price war companies will end up selling their products at the marginal cost for which it takes to build each new unit (specifically labor and parts) which doesn't include the fixed costs (overhead, factories, R&D). In the short run consumers win because prices are constantly dropping, and the producers "win" because they are covering their direct operating costs of producing the product. However, since prices eventually converge to a set level where neither competitor makes money on the incremental cost of producing another unit, and both are losing money on their overhead costs, prices will then rise back up to just about where they started- that is the point where the company can make a profit.
Three very good examples of this are the airline industry (pretty obvious), Satellite television in the UK (before consolidation), and the cereal industry. Cereals are interesting because they're actually quite expensive compared to most "staple" goods ($3-4.00 for a small box!). This is because the major players in the industry realized that after many attempts at price wars and driving each other out, that they were better off accepting thin margins with competition but staying profitable.
Bottom line- nobody wins in a price war. It hinders development, it creates an artificial value for a product, and they often result in the merger of two companies (or divisions of two companies) that typically generates one big unprofitable mess that has to be cleaned up by raising prices again.
While I have no love for Sony (bunch of rip-off artists), I actually think they are handling this "war" properly. They've recognized that the only people who truly understand the differences between the formats, and who are the only people who will use the technology as it should be used, are the high-end, deep-pocketed early adopters- the people who are willing to pay high market prices so they can be "the first". Remember, HDDVD and Bluray have been around for 18 months- 18 months into the lifecycle of standard DVD players the average retail price of a player was still $500. Let the early adopters pay back your R&D costs, and then start dropping prices to appeal to the masses while the early adopter crowd springs for the next technology.
