It’s early days yet. Usually consumer electronics come out at hight prices then gradually go down. Toshiba’s new $500 HD DVD player is an exception. My guess is that it was a tactic to grab more of the pie right away by forgoing the normal pricing route.

Early adopters are generally less sensitive to price, I think.

In general, there has always been room for higher priced and lower priced components. You can still get normal DVD players today that costs thousands of dollars. People buy them. More people buy the cheaper ones, though.