Pioneer Electronics aggressively addressed the pricing situation Tuesday, cutting the cost of its recordable and rewritable DVD discs nearly in half. The company's DVD-R discs now go for around $6, down from $10, and its DVD-RW discs run around $10, down from $20.
Gartner analyst Mary Craig said the price move will help sales, but it won't help explain which DVD format is best for consumers.
Manufacturers arein a fight over a plethora of formats, with each camp claiming theirs should be the standard in the recordable DVD industry. Lowering prices will help tempt buyers, but the major obstacle remains trying to increase the degree of compatibility with the large number of non-recordable, or "read only," DVD-ROM drives that have become entrenched in the market.
The DVD Forum, a group of companies that includes Pioneer, advocates three kinds of recordable formats: DVD-R, DVD-RW and DVD-RAM. DVD-R (recordable) lets consumers record to a disc once, while DVD-RW (rewritable) lets people record and rerecord on the same disc up to 1,000 times. DVD-RAM is a different kind of animal, geared more toward storing data than recording video. To simplify compatibility problems, the forum has devised the DVD Multi specification, which lets drives that support the spec read all three formats. The downside is that supporting the spec adds cost to drives, which is counter to the efforts of manufacturers as they try to increase their sales.
On the other side of the fence is another rewritable format, DVD+RW, which the DVD Forum opposes but which is being pushed by its own group. The DVD+RW Alliance includes companies such as Hewlett-Packard and Sony. The alliance has added still another format, DVD+R, as the latest feature to its namesake technology. The addition of DVD+R increases the number of DVD-ROM drives with which the DVD+RW format is compatible. Adding this feature, though, hasgone smoothly for manufacturers.
For the moment, Pioneer is sidestepping the compatibility issue and focusing on what it can control, increasing sales of its drives and media by lowering prices.
Last week, the electronics maker alsoits latest DVD-recordable drive, the DVR-A04, which will replace the DVR-A03 and cost about $150 less. The A04 will be available later this month.
The company lowered the cost of its discs in hopes that history will repeat itself. Andy Parsons, Pioneer senior vice president of storage sales and marketing, said that when CD-R prices began to fall, drive sales increased dramatically.
"When CD-R prices fell below $2, sales skyrocketed for drives," Parsons said. "We're looking for a similar effect here as prices go down."
Parsons added that CD-R discs currently cost around 20 cents and are more or less a replacement for floppy discs.
"If you carry that further down the road to recordable DVD and add in the increased capacity, it makes a lot of sense as the next step," Parsons said. DVD discs have a storage capacity of 4.7GB, which is about seven times more than that of a CD.
Craig said that consumers have a certain psychological price threshold for all types of products, and manufacturers are getting closer to it as they continue to lower prices.
"Once media is under $5 and drives are under $399, consumers are less likely to be hesitant to buy and manufacturers will begin to reach the mass market," Craig said.
Earlier this month, HP and other DVD+RW drive makersnew second-generation DVD+RW drives that cost around $500 and support DVD+R. HP said that its DVD+RW discs cost around $11, and its DVD+R discs, which will be available in April, will cost around $6.