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HP expands its booming CD-RW line

The Palo Alto, Calif.-based PC maker retools its line of CD-Writer CD-RW drives, with faster speeds and better software for converting MP3 files into CD tracks.

A shutdown order may loom over music-swapping service Napster, but that hasn't stopped Hewlett-Packard from delivering new tools for creating CDs from MP3s.

The Palo Alto, Calif.-based PC maker today retooled its line of CD-Writer CD-RW drives, with faster speeds and better software for converting MP3 files into CD tracks.

CD-RW has been on a fast growth track since last summer, in part spurred by the growing traffic in digital music, including MP3 files. Consumers can then use CD-RW drives to write their own music CDs, playable on PCs or standard CD players.

No company has benefited more from the CD-RW boom than HP, say analysts. Besides aggressively pushing a line of CD-RW drives sold at retail, HP also added the drives to virtually every consumer PC it sells. That move helped the company topple rival Compaq Computer as retail sales leader.

"There's no question, CD-RW was instrumental in HP's moving ahead of Compaq," PC Data analyst Stephen Baker said.

But the big business is still in drives sold directly to consumers, who later add them to PCs. HP leads all other CD-RW drive makers by a wide margin at retail, according to PC Data. In June, in terms of units sold, HP had 48.5 percent market share compared with 9.7 percent for Iomega. Sony, Acer and Yamaha followed, respectively, with 9.6 percent, 4.2 percent and 3.8 percent share.

In terms of drive revenue, HP had 47.5 percent share in June, according to PC Data. Iomega and Sony followed, respectively, with 10.1 percent and 9.8 percent share. Yamaha took the fourth spot with 4.3 percent share, with Acer rounding out the top five at 3.6 percent.

HP introduced six new models, available on Sept. 1, despite a parts shortage that has pushed up the price of CD-RW drives and made them more difficult to obtain. CD-RW drives sold at retail climbed to an average $250 the first five months of the year, from a low of $215 around Christmas, according to PC Data.

Four of HP's drives are internal, three using IDE connectors and one SCSI. The other two drives are external, using either USB or SCSI connectors. Prices range from $199 to $399.

The three most expensive models, the CD-Writer 9510i/9500i, 9600si and 9600se feature 12X write, 10X rewrite and 32X read speeds. The drives can write CDs in as little as eight minutes.

CD-RW drives sales are expected to be strong at least through 2004, eclipsing DVD drives this year. While DVD drives outsold CD-RW last year--16.2 million vs. 12.5 million units--CD-RW will take the lead this year, with 28.7 million projected CD-RW units shipped compared with 22.6 million DVD drives, according to market researcher Dataquest. But by 2002, DVD will begin to overtake CD-RW. By 2004, the firm predicts 105 million DVD drives will be shipped vs. 28 million CD-RW drives.

"It's a rockin' category, and it's certainly benefiting from new technologies, such as USB and FireWire," Baker said. "Assuming there's enough product to go around, things are only going to continue to get better going forward."

At retail, CD-RW sales are up 74 percent from a year ago and up 110 percent year to date, according to PC Data.