DVD-ROM Sales Slow Despite High Hopes
By Daniel Lyons
Boston -- Industry observers agree DVD-ROM is the next big thing in computer storage. But not everyone agrees on when DVD-ROM's day will actually come.
Some analysts predicted sales of DVD-ROM drives would take off this year. But so far, despite these optimistic predictions, the market remains somewhat lackluster.
"We don't see it happening this year or even next year-not widespread adoption anyway," said Mary Bourdon, analyst at Dataquest Inc., San Jose, Calif.
Only 12 months ago, Dataquest predicted sales of DVD-ROM drives would reach nearly 2 million units in 1997, but sales last year only reached 736,000 units.
The reason is that no vendor has come up yet with a compelling enough reason to invest in using higher-priced DVD-ROM technology instead of CD-ROM drives, Bourdon said. "Everyone is struggling to come up with the killer application."
That killer application is likely to be something having to do with education, entertainment or reference, she said. Or it could be a video game.
One thing is certain though-it will be a large application. "The biggest advantage of DVD is simply the higher capacity of the medium," Bourdon said.
DVD-ROM disks can hold up to 4.7 Gbytes of data, compared with 650 Mbytes for CD-ROM disks. DVD-ROM has the capacity to hold two hours of full-motion video (full-length feature films) and future drives will hold up to 17 Gbytes, said industry experts.
"Once you have a situation where it's common to have software distribution needs that exceed the capacity of CD-ROM, then you'll see demand for DVD. But we don't see that occurring in the near future," Bourdon said.
Still, Dataquest projects that sales of DVD-ROM drives will grow over the next few years, while sales of CD-ROM drives will peak in 1999 and then begin to decline. In 2001, sales of DVD-ROM drives will exceed those for CD-ROM, the market-research firm said.
Worldwide sales of DVD-ROM drives will grow from 736,000 in 1997 to 5.4 million in 1998 to 16 million in 1999, the researcher found. In 2000, the explosion will begin: Sales will grow to $41.6 million, then nearly double to 88.5 million in 2001. By 2002 sales will be 132.9 million, Dataquest predicted.
Sales of CD-ROM drives, meanwhile, will grow to 83.1 million in 1998 and top out at 89.2 million in 1999 from 71.5 million units in 1997. In 2000, sales will decline to 82.2 million, then slide again to 55.3 million in 2001, dropping to 33.5 million units in 2002, according to Dataquest estimates.
About a dozen companies currently are manufacturing DVD-ROM drives, but only three have significant market share. Hitachi America Inc., Brisbane, Calif., leads the market with 38 percent, Irvine, Calif.-based Toshiba America Information Systems Inc. has 28.5 percent, and Panasonic Personal Computer Corp., Secaucus, N.J., has 28.2 percent, said Dataquest.
In addition to a lack of a specific need, another brake on DVD-ROM sales is the fact that the drives are read-only. By early next year, a new generation of read-and-write DVD drives will hit the market, industry experts said. Like DVD-ROM, they will be able to read CD-ROM disks. Initial capacity, however, will be only 2.6 Gbytes, said observers.
The problem with read-and-write DVD, however, is that there is no single standard. Currently there are four competing standards: DVD-RAM, promoted by a consortium called the DVD Forum; DVD+RW from Sony Corp. and Philips Electronics N.V.; DVD-R/W from Pioneer New Media Technologies Inc.; and NEC Corp.'s MultiMedia Video File Format (MMVFF).
"It's certainly confusing," said Jim Porter, president of Disk/Trend Inc., a research firm in Mountain View, Calif., that specializes in tracking the storage industry.
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