DVD moves slowly, report says

Battered by incompatibilities and the continued price/performance strength of CD techology, DVD computer drives will not have a significant impact on the storage market until after 2001, a year later than previously expected, according to a report by consulting firm Freeman Associates . DVD drives' slow market acceptance was attributed to incompatibilities among DVD formats, as well as delays in availability.

Battered by incompatibilities and the continued price/performance strength of CD techology, DVD computer drives will not have a significant impact on the storage market until after 2001, a year later than previously expected, according to a recent report by consulting firm Freeman Associates Inc.

DVD (digital video disk) drives' slow market acceptance was attributed to incompatibilities among DVD formats, as well as delays in availability.

Rewritable DVD drive shipments, which began in 1998, totaled 137,000 units -- a third of the quantity that Freeman Associates forecasted last year, according Robert Abraham, co-author of the report, "The Optical Storage Outlook." That was only a fraction of the 4.8 million [M] CD-RW (CD-Rewritable) drives that shipped in 1998, up from 1.25 million the previous year, according to the report.

The "exploding" demand for CD-RW will continue until 2001 and will impede DVD's short-term prospects, braham predicted.

CD-RW drive shipments dwarfed those of DVD drives because of the initial delays in bringing DVD technology to market, and by the introduction of an alternative recordable format, DVD+RW, which has caused incompatibilities among DVD drives, said Abraham.

But despite its slow start, DVD technology's long-term prospects remain strong, Freeman Associates forecasts.

"The crossover point for when DVD products will overtake CD products will be 2001 -- a year later than we and other analysists had previously thought," Abraham said.

Under the Optical Storage Technology Association's supervision, optical digital companies are working to resolve incompatibilities among DVD formats.A read compatibility specification will accelerate the demand for DVD products, says Abraham.

DVD drives are faster and have more than seven times the data capacity of CD-RW drives. Users who require great capacity and performance will naturally migrate to DVD products, Abraham said. "The question is 'At what point does a company bite the bullet and upgrade from CD to DVD?'"

In the future CD-ROM will probably not be able to keep up with performance levels that DVD can conceivably achieve. Additionally, the pricing for DVD products, while still high in comparison to CD counterparts, is dropping rapidly, Abraham said.

Among the early adopters of DVD products are companies that have implemented applications for which capacity is more critical than cost, such as those at government agencies and in entertainment businesses, Abraham said. "For a few more dollars users can get a lot more storage capacity."

The continuing momentum behind CD products through 1998 was one surprising finding of the report, said Abraham. "We discovered that CD products were not giving in to DVD technologies."

The performance of CD technology grew so rapidly over the past two years, while prices dropped so dramatically, consumers were not motivated to move to DVD, Freeman Associates concluded. "The degree to which CD products still had a hold on the storage market is not what we expected."

Top vendors in the DVD market include Toshiba Corp., Hitachi Ltd., Matsushita, Sony Corp. and Philips Corp.

The Freeman Associates, in Santa Barbara, California can be reached at +1-805-963-3853 or at http://www.freemaninc.com/.

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