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Analyst Predicts Explosive DVD Player Growth

20 Mar, 2002 By: Hive News

DVD players emerged as the fastest-selling consumer electronics product in 2001 rapid sales growth and will continue for the next several years, according to the latest report from iSuppli Corporation's Market Intelligence Services group.

DVD player sales in 2001 grew by more than 31 percent to $5.25 billion, up from about $4 billion in 2000, according to the report: DVD Players and Recorders: Seizing a Spot in Every Home Entertainment System. iSuppli predicts DVD player sales will grow to $15 billion in 2006, up from $6.9 billion in 2002. An estimated 30 million DVD players were shipped in 2001, and that number is projected to grow to 43 million in 2002 and then to 125 million by 2006.

"DVD players were the hottest-selling consumer electronics item in 2001," said Jay Srivatsa, principal analyst for consumer electronics and embedded processors, and author of the report. Meanwhile, DVD player manufacturers are anticipating the emergence of a new product that also promises strong sales growth: the DVD recorder.

iSuppli predicts DVD recorder sales will grow to $5.25 billion in 2006, up from $760 million in 2002. Despite the bright future for DVD players, iSuppli is warning manufacturers to be aware of potential pitfalls in the market. These hazards include price erosion caused by competition among current Japanese and Korean players and potential future price pressures brought on by the entry of Chinese OEMs into the market.

To stave off price erosion, DVD manufacturers are considering the further integration of semiconductor components and the addition of high-end features. iSuppli is advising manufacturers to further integrate functions on the DVD player's back-end so that the only remaining function of the DVD drive is handling the analog front end, channel processing and servo processing.

The addition of high-end features like Super Audio CD (SACD), DVD-Audio and progressive scanning for better visual and audio quality also will present an opportunity for manufacturers to edge up the prices for DVD players and to grow their profit margins. While manufacturers are trying to prevent price erosion of DVD players, they also are looking for cheaper ways to build DVD recorder drivers in order to make this a more attractive product.

"The DVD recorder has the potential to become a viable alternative to the VCR, given the cost of a DVD recorder drive drops by almost 60 percent over the next few years," Srivatsa said.

However, the growth of the DVD recorder industry has been stymied by a lack of a single industry standard. This has required manufacturers to build DVD players and DVD recorders that can play all three prominent formats: DVD RAM, DVD-RW and DVD+RW.

"Since there is no standard, backward compatibility is very important," Srivatsa observed. "Of the three leading formats, DVD RAM is the least likely to become the industry standard because it is not compatible with most DVD players on the market."

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