Media, burners for DVDs hot items

August 12, 2004|By Jackie Cohen | Jackie Cohen,CBS Marketwatch

Now that DVD recorders and media have become almost as cheap as their CD predecessors, the newer technology is poised to dominate the market.

Having crossed under the $100 price threshold, DVD recorders are becoming standard components in midrange PCs. And it's only taken 18 months to happen; CD burners took four years to reach this point.

"This business is very cyclical," said John Freeman, a consultant at Strategic Marketing Decisions. "When you get enough production capacity, then the prices come down."

When DVD burners got started, "we had a huge manufacturing capacity to make optical drives, we had already migrated from CD-Rs to combination drives and everyone wanted to get the next-generation technology as soon as possible," he said. "And all of that has made the rollover to DVD really quick."

Freeman estimated that nearly 60 million DVD burners (both PC components and television set-top boxes) will be sold this year, up from 25 million last year and 5 million in 2002, when they hit stores.

Other estimates came in significantly lower. International Data Corp. pegs all types of DVD recorder sales at 16.4 million last year and 37 million this year. CD burners are still selling briskly, with the corporation expecting 120.5 million units to move this year, compared with 94 million last year.

About 5.5 billion recordable CDs will sell this year, 5 million more than last year, said Andy Marken, research analyst and spokesman for disc vendor Verbatim.

By contrast, 1 billion recordable DVDs are expected to be sold this year, up from 500 million last year, he said.

"The life cycles are shortening, but the focus is on speed," Marken said. "We went from having 2x [DVD burners] to having 16x in less than 18 months," with the speedier technology hitting stores in a month.

Nonetheless, 8x burners cost less than $100, even though retailers have excess inventory of 4x burners, he said.

Meanwhile, newer technologies are well on their way. Now appearing are so-called dual-layer DVD burners, which nearly double the capacity of the discs from the prevalent 4.7 gigabytes to about 9 gigabytes.

Today's 4.7-gigabyte discs barely have enough room for a whole movie, forcing downloaders to compress the files - often sacrificing video quality. No compromises need be made with dual-layer discs, which hold twice as much information.

The technology will become more widely available this fall, but that doesn't mean it will be affordable. While a few dual-layer burners are approaching the price of other DVD burners, blank discs cost almost as much as retail movies. Blank dual-layer discs cost $12 apiece - compared to 80 cents to $1.50 for a recordable DVD disc and pocket change for a blank CD.

The prices have everything to do with competition, and "there's too much of it," Marken said. "We've just barely started shipping one burner, and they're already announcing a burner that's two generations out. Why would you buy it if you know it's going to become obsolete?"

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