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To: DiViT who wrote (2371)	2/11/1999 6:13:00 PM
From: Steve Reinhardt	Read Replies (3) \| Respond to of 3493

Toshiba and Philips' DVD is still selling for between 2000RMB to 3000 RMB. SuperVCD is around 1200 to 1500 RMB while VCD can be as low as 600RMB. There's a lot of VCD disks available. SVCD disks are catching up since the Chinese can make the SVCD disks easily. The problem with the spreading of DVD players are two folds: (1)Still priced too high compared with SVCD player; There is still a 2 to 1 price gap; (2)Lack of DVD disks in China. Especially the Chinese can not produce these disks, legally or illegally. ESS is watching this market with a magnifying glass and a direct link between the China market and the Fremont headquarters. Steve

To: DiViT who wrote (2371)	2/12/1999 2:42:00 PM
From: DiViT	Respond to of 3493

Hong Kong VCD production scaling back... asiansources.com VCD players Hong Kong output low Output volumes of VCD players in Hong Kong are falling somewhat as makers prepare for DVD or switch their production and marketing emphasis to a different line. The regionwide economic meltdown has also impacted suppliers whose major outlet is Southeast Asia. Competition from mainland China has likewise hurt sales. Joyce Yung, a director at Tung Da Audio, said a China-made VCD player can sell for as low as $45 FOB, a price Hong Kong manufacturers cannot possibly match. Instead of competing head-on with mainland makers on these terms, the firm plans to expand its range of radio cassette recorders/players. Another Hong Kong maker, however, is taking a different tack. Instead of abandoning production, Wai Kai Electronics aims to expand its OEM and ODM business. With that in mind it has applied for CE approval. According to Tai, while mainland China has a hold on the market, the departure of Japan brands from the VCD line a couple of years ago means an opportunity for Hong Kong. With new models scheduled to arrive in the second half of 1999, Wai Kai Electronics looks to a 20 percent growth in its VCD exports before the end of the year. Tai expects the VCD player, particularly portable models with LCDs, to remain in the market for two more years. He said developing countries would not immediately adopt DVD players because of the high price.