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Will DVDs Drive Out CDs?

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DQC News Bureau
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When CD-ROM technology was introduced in 1980, markets worldwide

forecast a data storage revolution. Within a few years, the CD became the in-thing for

storage. Today, one cannot imagine a PC without a CD-ROM drive. Most companies have begun

to make the most of CD-ROM technology by storing data, audio and video.

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Then came Digital Video Disk (DVD) technology in 1996. Almost at the

same time, it made an entry into Indian markets too. DVD became the fastest-growing

segment in the history of electronic products throughout the world. But in India, it is

yet to catch on.

Just when DVD technology was beginning to make its presence felt in the

Indian market, a shortage occurred. The reason for the shortage was that flash memory

chips which are used to manufacture DVD drives, were in short supply due to the closure of

a couple of chip fabs in Taiwan.

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The price factor

The DVD technology is gaining acceptance but slowly mainly because of

the price factor. The less expensive CD-ROM and CD-ROM drives are still in great demand.

"The high cost of the product makes it less popular," says one retailer

"but prices are coming down and people have begun to accept DVD technology."

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On the other hand, Jignesh of Computer Mediaproducts, feels that the

technology will not work in India. "CDs are very cheap compared to DVDs. CDs are here

to stay, unless DVDs become as cheap as CDs," he adds.

Amarnath Puri, Channel Manager of Minicomp also has something similar

to say, "For the salaried class, DVDs are still costly. I don’t think DVDs will

become popular for quite some time."

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The latest trend

Some local distributors feel that despite the high price, DVD will

catch on because of better sound quality over CDs. Some distributors have even reported

good sales lately for DVD drives they deal in. Savex Computers a distributor for ASUS DVD

drives sold around 1000 pieces in the last two months. "The sales began to pick up

only two months back. Last month the sales were slightly down because of low supply caused

by shortage of flash ROM used inside the DVD drives," says Mahindra Wahile, Business

Manager of Savex.

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SES Computers, distributor for Acer DVD drives sold 100 pieces last

month and 125 pieces in the current month.

"There was hardly any sale three months ago, but now it has picked

up. Awareness about DVDs is increasing," says an executive at Aditya Infotech, a

distributor for ASUS DVD drives.

Computer Mediaproducts recently sold 400 pieces of Mitsubishi DVD

drives, up from 50-100 pieces sold three months ago.

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History of DVD technology

 

DVD technology was not the work of any single company or person.

Originally two standards were introduced. MMCD was a format backed by Sony, Philips and

others, while the SD format was backed by Toshiba, Matsushita and Time Warner. However,

official specification was developed by a consortium of ten companies -- Hitachi, JVC,

Matsushita, Mitsubishi, Philips, Pioneer, Sony, Thomson, Time Warner, and Toshiba.

Representatives from many other companies also contributed in various working groups. In

May 1997, the consortium was replaced by the DVD Forum, which is open to all companies.

 

Why DVD drives?

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The number of customers who would actually go in for DVDs are very less

compared to CDs because of its present usage. DVD has become a promising new storage

medium especially for video and audio. DVD is best used to store high quality video. So it

is more popular among movie buffs. "It will take some time, maybe an year for Indian

customers to make use of DVD for storing data and replacing the CDs altogether," says

a user.

As of now, it appears that end-users are going in for DVDs looking at

the future. Since a DVD drive can also play CDs, people have shown an inclination to go in

for the latest technology.

"Demand is more from branded PC manufacturers such as Compaq which

has already begun to substitute CD-ROM drives with DVD drives," says John Nogueira,

Senior Marketing Executive at Compunics, adding "It will take at least six months to

one year for the DVD market to catch up in India." Compunics, a retail outlet for

Creative is yet to report substantial DVD drive sales.

Compatibility factor

Earlier, the compatibility factor was also a deterrent for customers to

accept this new technology. If one tries to add a DVD drive to a system that already has a

CD-ROM drive, the combination may not work together. The compatibility factor largely

depends on manufacturers who have been using two different standards.

The entry of DVD technology is more of a threat-turned-challenge for

the CD-ROM industry to grow faster than it should. Indeed, CD-ROMs grew fast for some

time. But now the pace is sure to subside since DVD technology is catching on.

But what will happen to the millions of CD media? "The same thing

that happened to floppy drives! CD-ROMs will be phased out in the next few years,"

says John.

Global trends

The DVD player market worldwide soared from zero shipments in 1996 to

more than five million units in 1999. Experts have predicted the DVD player shipments to

grow to 27.9 million units by 2003. But expect a slowdown in 2002 as people would start

buying DVD recorders, (a device which can record as well as play), in meaningful numbers.

Just as the entry of CD-RW drives pushed down the prices of CD-ROM

drives, the entry of DVD-R drives can be expected to push down the prices of DVD drives.

Thanks to India’s price sensitive market, this should boost demand for DVD drives in

the near future. That is how the market has behaved historically.

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