Shinco feels the bite of low VCD prices.............
Cover story: Video CD players
Hong Kong rethinks to fill the years before DVD
Unable to compete in the mainland market for VCD players, and still mostly believing that DVD players are too expensive to penetrate their customer base, Hong Kong's manufacturers have been compelled to revise their thinking on the line. What to do in the few remaining years before DVD converts the mass market?
Many have bailed out of the line completely, or are in the process of completing their withdrawal. One, Yanion, has elected to focus on developing new markets for its VCD players, emphasizing quality ahead of cost. For others, SVCD has provided what they hope is the ideal interim solution.
Shinco International and Skyworth number among that last group. Shinco believes the faster, higher-resolution SVCD player has a potential two-to-three-year market in developing countries, and has developed a line of console and portable players to exploit that opportunity. Single-disc and three-disc changers are available, using Sony mechanisms and ESS decoders. All are backward-compatible with VCDs, and some offer MP3 audio support. Prices run from about $90 to about $230, FOB.
Shinco has dropped VCD players completely. Skyworth, a specialist TV maker, continues to offer them as a sideline along with its new SVCD players. "The demand [for VCD players] is actually still there. They still have three to five years to run," said Mak.
The firm makes V2.0 console-type models only, priced in the range $50 to $90, FOB Hong Kong. Version 3.0 players are primarily for use with computers, Mak said, and Skyworth has no plans to develop them.
Although SVCD players provide much better video performance, Mak cautioned that the shortage of software titles could hold back development of the line. Although SVCD players are all backward-compatible with VCD discs, the benefits of the more expensive technology cannot be fully enjoyed with the earlier software. If SVCD prices were to fall, demand would improve, he said.
Yangsheng Technologies Ltd also continues to produce VCD players alongside its SVCD players. The firm exports the players in SKD form to assemblers in markets including India and Taiwan, reducing import duties by as much as 60 percent, senior sales engineer Bernard Wong said.
Yangsheng is in the unusual position of being able to benefit from the explosion of small, inexperienced suppliers in the mainland, Wong said. The firm got into VCD players early, in 1995, acquiring the manufacturing technology from Sanyo. It developed and sold its own mechanism and servo board to local Hong Kong makers, together with technical support and assistance with circuit design. As Hong Kong has come up to speed, Yangsheng has switched its focus to mainland China.
"There are lots of makers there who are interested in entering the line but who don't have the technology to do so. We can give them help and technical support," Wong said. That help is primarily with VCD players, but the firm can also assist with SVCD and DVD players. SVCD, Wong says, has a short but a bright future. He sees prices quickly falling to $60, at which time the technology should supersede VCD. Output this year alone should increase 30 percent, he said.
No to Super VCD
Like Yangsheng, Yanion also ships a large proportion ? about 50 percent ? of its VCD players in SKD form, to markets including India and Indonesia. The firm is also hoping to develop new outlets in Eastern Europe, Ho said, and is forecasting sales growth of 10 percent this year.
Unlike Yangsheng, Yanion has no faith in SVCD as a saving technology, stop-gap or otherwise. The firm has rejected the technology on the grounds that it is too expensive and that there is too little software support. It is also phasing out three-disc VCD changers, again for reasons of cost, and has cut back investment in basic VCD consoles.
In the five-year window until DVD replaces VCD, most work will be focused on portable VCD players, Ho said. Casings for portable players are not readily available to the mainland cottage industry, and the costs of development are prohibitive, he said. Yanion is therefore playing on a less crowded field, where it is able to emphasize quality ? its main competitive advantage, Ho said ? rather than merely having to compete on price. The firm uses Sony mechanisms and a new digital servo Japanese IC, he said. It also runs thorough QC tests, for trackability, playability, error correction capability, and image color quality and resolution.
Plan C
There is a third option to developing SVCD or persevering with VCD, and that is to drop the line completely. This is the choice that Welton Electronics and Aowa Electronic have taken. Both firms are in the process of clearing their stock.
Welton got caught up in the VCD craze in 1997, when it incorporated a player into its Dolby Pro Logic hi-fi system, Au-yeung said. Encouraged by the market response, it then added a standalone three-disc VCD player to its lineup. Both models used high-quality Philips mechanisms, Au-yeung said. Quality quickly took a back seat to price, however, and the firm was forced to cut its quotes by up to 50 percent to remain competitive. Welton is now returning to its core business of hi-fi audio.
Aowa tells a similar tale. The firm has a mini hi-fi system with a V3.0 VCD player on its books, priced at about $158, FOB Hong Kong. It also makes a portable VCD player with color TFT-LCD, priced at about $250. Both models are being cleared from stocks and will not be replaced.
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