Friday September 12 3:58 PM EDT
Company Press Release
Desperate to Unload Their Inventories, DVD-ROM Drive Manufactures Are
Offering Machines at Prices at or Below Cost
MANHASSET, N.Y.--(BUSINESS WIRE)--Sept. 12, 1997--
Exclusive Report by CMP's Electronic Buyers' News Posted at
ebnonline.com
Hurt by product delays and sluggish sales, makers of DVD-ROM drives have begun offering drives at prices at or below the
manufacturing cost, say analysts and industry executives.
According to an exclusive report by Electronic Buyers' News Associate Editor Mark Hachman, analysts speculate that for
some drive makers the price cuts reflect the fact that the industry took so long to overcome the roadblocks of
content-scrambling licenses and to persuade Hollywood to develop content. The full report can be found at
techweb.cmp.com.
While none of the companies will admit to selling drives at a loss, according to the publication, analysts believe prices have
fallen far faster than expected. Instead of the $325 to $250 per drive many had forecast, some vendors are pushing them out
the door for as little as $100, a markdown not anticipated until mid-1998.
Like CD-ROM drives, DVD-ROM drives were originally introduced at the same speed grades as commercial CD or DVD
players. These 1X DVD drives have already begun to give way to higher-margin 2X drives, offering about twice the
performance.
Yet one 2X DVD-ROM drive from Hitachi America Ltd.'s (NYSE:HIT) Storage Products Group is being sold to OEMs at
``less than $200,'' said Werner Glinka, Director Of Marketing for Hitachi, Brisbane, Calif. Although Glinka said Hitachi is
making money on the drive, he declined to reveal the company's profit margin.
Analysts and industry executives say they are hearing anecdotal reports of older 1X drives being sold for $100 to $150--an
amount that not only approaches the material cost of the device, but also that of the mass-market CD-ROM.
``The key issue is how DVD-ROM-drive and CD-ROM-drive pricing compares,'' said Ray Freeman, President of Freeman
Associates Inc., a Santa Barbara, Calif.-based market research firm. ``As they near parity, that's when you'll see the crossover
occur.''
DVD are the next-generation high-capacity storage devices capable of holding video, audio and data. DVD discs are the same
diameter as a CD-ROM, but can hold significantly more data.
Since its inception in 1971, CMP Media's Electronic Buyers' News has been the most widely read publication serving
purchasers of electronic components. An essential source of pricing trends, new products, supplier reports and industry
developments, Electronic Buyers' News (http://www.ebnonline.com) targets more than 62,000 OEM purchasing and
corporate managers, weekly.
CMP Media Inc. (Nasdaq:CMPX) is a leading publisher of newspapers and magazines about technology. With U.S.
publications focusing on computers, electronics, information technology and the Internet, it serves the broad technology
spectrum: those who build it, those who sell it, and those who use it. All publication titles, including WINDOWS Magazine,
InformationWeek, Computer Reseller News and EE Times, along with the company's other Internet products and services,
can be found on CMPnet at cmpnet.com.
NOTE: All of CMP's press releases are available on the Web at techweb.cmp.com. Journalists and reporters
may also set up interviews with CMP's high technology experts through the site by e-mail.
Contact:
CMP Corporate Communications, Manhasset
Steve Rubel (516) 562-7434
e-mail srubel(at)cmp.com
or
Catherine Jarrat Koatz (516) 562-7827,
e-mail ckoatz(at)cmp.com.
More news for referenced ticker symbols: CMPX, HIT, and related industries: computer, publishing. |
