DVD-ROM MAY PICK UP STEAM AS PC PRICES STABILIZE
12/14/98
DVD Report
(c) 1998 Phillips Business Information, Inc.
In the throes of the holiday selling season, the outlook for DVD-ROM in the U.S. remains somewhat more cloudy than DVD advocates would like. But despite disappointing results through most of 1998, InfoTech is holding the line on earlier forecasts and counting on a year-end upswing in sales.
During an interview last month with Cnet news, InfoTech's Ted Pine seemed bearish on DVD-ROM, downgrading his firm's estimates for 1998 sales to somewhere in the neighborhood of 5 million, compared to the 6.5 million forecast earlier this year ( DVD Report , June 22). But when DVD Report caught up with Pine last week, he said that he's no longer sure that DVD won't live up to its earlier billing.
"I see some signs that the DVD-ROM train is finally leaving the station on the hardware side," Pine said. "The quantitative sign is that, if you look at the month-over-month average selling prices of consumer and business PCs, they're stabilizing. And that's the environment you need in order to switch out of CD and into DVD. As long as prices were in freefall, nobody was going to put DVD-ROM in a value-priced system."
Another factor in Pine's renewed optimism is his perception that consumers are finally accepting and buying into the resource-hungry Windows 98 as the new must-have operating system. With demand for Windows 98 comes demand for faster computer systems, which Pine noted are now shipping with DVD-ROM as standard equipment. "It's no longer looking like the day is over for high-end performance systems," Pine said.
Mary Bourdon of Dataquest is sticking with her previous forecast of 5.4 million DVD-ROM drives shipped ( DVD Report , June 29), a downward revision from earlier Dataquest numbers. "Demand hasn't been there," Bourdon explained, "and the price points have yet to come down and overtake CD-ROM."
Regardless of what the final numbers turn out to be, Pine is optimistic that they will jolt videogame developers, who have been slow to commit to DVD titles, into finding a strategy. Pine sees their efforts being complicated by the indifference of OEMs, who are working on slimmer margins than ever before, to the prospect of bundling titles with DVD-ROM drives.
"If you get an OEM deal at all, it's going to be manna from heaven," he said. "Even though the numbers are looking good on the hardware side, fundamental changes in the world of publishing make every new title an even more risky proposition than it was five or six years ago."
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