October 19, 1998, Issue: 223
Section: News
Doug Olenick
New York - The freefall of CD-RW hardware and media prices is propelling
this year's aftermarket sales, but the jury's still out on whether CD-RW
will make inroads into the PC OEM market in 1999.
Due to increased production of CD-RW drives, prices for entry-level
CD-RW drives have dropped to the $200-to-$300 level from $400 to $500 at
the beginning of the year. Higher-performance models are typically
priced above $500. CD-RW media prices have also dropped by 50 percent
this year, to as low as $10 to $15.
These price adjustments place CD-RW drives firmly within the consumer
market and bring the drives to the same price level as CD-R products,
all but eliminating the write-only drives as a viable retail product,
said Devin Sanders, retail training manager for Hewlett-Packard.
CD-RW unit sales increased 756 percent from August 1997 to August 1998,
while CD-R sales dropped 16.3 percent for the same period, according to
PC Data, Reston, Va. This trend is expected to continue, and HP's
Sanders said 15 million to 20 million CD-RW drives will have shipped by
late 1999 industrywide.
"I expect the number of CD-RW drives to ship this year will at least
double that of last year, and that's being on the conservative side. On
the other hand, I think in terms of the mechanisms themselves, CD-R will
fade out, but the CD-R media will do very well," said Sanders.
Carol Soper, Ricoh's product manager for CD-RW, said the drives are
being used to back up data, record music and store files downloaded from
the Internet.
Despite the inherent value CD-RW offers and the aftermarket sales taking
place, the OEM market is nonexistent.
CD-RW is not offered as a standard feature by any PC vendor, said
Cameron Duncan, PC analyst for ARS, Irving, Texas. However, a Gateway
sales associate said a Philips CD-RW is a $225 option for its desktop
program.
There are still a number of pricing and compatibility issues that will
keep CD-RW from replacing CD-ROM drives in systems within the next few
years, vendors said.
Mal Ransom, Packard Bell NEC's senior vice president for marketing, was
optimistic.
"It is reasonable to think that CD-RW could be included [in systems]
next year, but there are still a couple of issues, like the price delta
of it with CD-ROM drives, that have to be resolved," Ransom said.
William Johnson, manager of the personal system group at IBM's drivers
and building blocks division, concurred, saying, "We do not currently
have CD-RW available, but are looking at it very strongly for the first
half of next year." CD-RW drives will first be incorporated into IBM's
high-end PCs, he said.
Depending upon the product's performance, CD-RW can add $150 to $300 to
a PC manufacturer's cost.
Compatibility issues are also a minor stumbling block. CD-RW discs
cannot be read by CD-ROM drives without multi-read capability.
Multi-read models are those with read speeds greater than 24x, an HP
spokeswoman said.
In addition, many vendors are not delivering drives with higher rewrite
speeds because the industry has not set a standard for the 4x rewrite
speed. Most CD-RW drives now offer only 2x rewrite ability, for which
there is a standard.
"Hewlett-Packard is waiting for the 4x specification to be set. If we
were to release a 4x drive today, it might not meet the future industry
spec," HP's spokeswoman said.
Smart & Friendly and Yamaha, however, have released 4x CD-RW units.
Copyright ® 1998 CMP Media Inc. |
