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Confusion Hampers Writable DVD Adoption

31 Jul, 2002 By: Hive News

New research Pioneer Electronics (USA) Inc. commissioned from IDC identifies DVD technology as the potential key to propping up the sluggish PC and chip industries.

"The mainstream consumer has accepted DVD and adopted it as part of their lives faster than any previous technologies – televisions, cell phones, VCRs, anything," said Andy Parsons, SVP for Pioneer Electronics (USA). "Sales of DVD players will approach 40 percent penetration by the end of this year and show no sign of slowing down. Now, the new research on the market shows consumers are ready to embrace DVD recording as a replacement for creating home movies and personalized videos."

Consumer Demand and the Emerging Markets for Recordable DVD, an IDC White Paper, points to consumer interest and demand for home video creation and editing capabilities from their PCs as a potential driver for sales of faster, next-generation machines with greater hard drive space and multimedia capabilities.

That's good news for PC and chip manufacturers who have had difficulty meeting recent earnings targets, according to Wolfgang Schlichting, chief DVD analyst for IDC Research Corp. and author of the study.

"The opportunity for DVD recording in the PC industry is tremendous," said Schlichting. "It has the ability to drive a legitimate, functional need for faster and more powerful computers with the latest in multimedia chips and devices.”

DVD player sales in North America have grown from approximately 9.8 million in 2000 to 16.7 million in 2001 to an estimated 20 million in 2002,

according to the DVD Entertainment Group, which also estimates that nearly half of all US homes will have DVD capability by the end of this year.

"The PC industry has a real opportunity to benefit from the growing consumer appetite for DVD technology," Parsons said.

While many industry analysts agree that DVD recording technology could provide a similar major financial boost to the PC industry, Schlichting warned that two serious obstacles must be overcome before the market can benefit from the DVD revolution.

The first obstacle is consumer education from the PC industry. While some manufacturers have proactively used DVD recording as a marketing edge to push high-end machines, most have yet to get behind the trend, mistaking DVD as primarily a data storage technology rather than a video technology.

The second obstacle as the ability and willingness of the industry to "make it simple" for consumers, Schlichting said, specifically pointing to the ongoing writable DVD format war in the industry.

"Confusion over format compatibility is sending shock waves to potential buyers – consumers, PC buyers and OEMs – and that is resulting in lower rates of acceptance in the PC world. Standards confusion will continue to make market conditions challenging for all players," Schlichting said. "Consumers need assurances about DVD compatibility and education about how to maximize the potential of DVD technology."

Formats in use in the writable DVD market are: DVD-R/RW, DVD-RAM and +R/RW, Parsons said. The combination of computer drives and set-top recorders shipped to market that support the DVD Forum's DVD-R format has far outpaced the competition, according to information provided by analyst firm Techno Systems Research.

Techno Systems recently compared DVD-R/RW and +R/RW, the two format groups that are most often confused. They estimate that by the end of 2002, there will be 3.2 million DVD-R/RW capable drives on the market, as opposed to 1.5 million +R/RW drives. Computer manufacturers Apple, Sony, Compaq, Gateway, NEC, Micron PC and VPR Matrix (sold exclusively by Best Buy) are selling DVD-R capable drives. Original equipment drives supporting the DVD-R/RW format are expected from Pioneer, Hitachi-LG, Panasonic and Toshiba. In comparison, +R/RW drives are sold by computer manufacturers HP and Dell as well as a number of aftermarket brands, all primarily sourced from Ricoh.

"It seems to us that the format war has been seriously overblown. The vast majority of drive manufacturers, OEMs and set-top player manufacturers have clearly weighed in to support DVD-R/RW as the writable DVD format best positioned to satisfy the needs of the computer drive and set-top markets," Parsons said.

"Meanwhile, if you look at the DVD Forum's track record of shipping official DVD formats over the past four years, it's really difficult for us to comprehend why the +RW camp decided to enter the market late with formats that are confusing the industry with strikingly similar – but incompatible – physical formats. When the end user can only tell the DVD-R/RW and +R/RW formats apart by looking carefully at a punctuation mark, the vision we had four years ago of compatible, ubiquitous writable DVD formats is needlessly confused."

A copy of the study is available at pioneerelectronics.com.

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