Pioneer to spin off DVD-R drives

The company plans to start selling an add-on version of its drive that can play and record both CDs and DVDs.

4 min read
People will soon be able to record their own DVD movies without shelling out money for a new computer.

Pioneer plans to start selling around May an add-on version of its drive that can play and record both DVDs and CDs. DVDs recorded using the drive can be played back on most consumer DVD players.

Right now, the Pioneer drive is only available as the SuperDrive in Apple Computer's priciest 733MHz Power Mac and in several high-end computers from Compaq Computer just hitting the market.

Pioneer will sell the DVD-R unit as an internal drive that can be added to a computer tower, while other peripheral makers will be allowed to sell it as an external drive.

Although the drive will likely attract customer interest, a number of issues will influence its success, including how many drives will initially be available and whether Apple will make its iDVD software compatible with third-party drives.

"I don't know if we're going to be able to meet all the demand," a Pioneer representative said Monday.

Another potential problem: A rival format dubbed DVD+RW is expected to debut in the second half of the year, with the possibility of fragmenting the market and causing compatibility issues.

And for external drives to really find success, the price has to be right. Analysts say that won't happen right away. Pioneer's new drive will carry a suggested retail price of about $1,000.

"You won't start to see these things take off before a $499 price point," said Stephen Baker, an analyst with market researcher PC Data.

For those who want to record DVDs today, however, the new drive represents a dramatic savings over past devices, which cost thousands of dollars.

Mac owners, among others, have been clamoring for an add-on version of the drive since Apple CEO Steve Jobs introduced the SuperDrive as part of a new high-end Power Mac in January.

Recordable DVD drives will find themselves competing against cheaper, more ubiquitous CD-rewritable drives.

CD-RWs exist in an established environment. In bulk, CD-RW discs now sell for as little as 15 cents each. The cheap discs, coupled with consumers who crave digital music downloaded from the Internet, have led to a boom in CD-RW sales. More than 60 percent of PCs sold at retail now pack CD-RW drives up from a scant 1.7 percent in July 1999, according to market researcher PC Data.

Market researcher Dataquest forecasts that manufacturers will ship more than 38 million CD-RW drives in 2001. By comparison, players capable of recording DVDs are expected to fall shy of 2 million this year, but reach 14 million units by 2004.

Although DVDs can store more information than CDs, the discs cost far more. Jobs promised media prices of about $10 a disc when he introduced the SuperDrive. Apple has held to that price, offering packs of five DVD-R discs for $50.

Compaq offers six free discs with its new PCs with DVD-R drives but is charging about $100 for DVD-R five-packs.

"We expect the prices to drop rapidly as the volumes increase," said Yen Mei Chen, Compaq's modules marketing manager.

Dataquest analyst Mary Craig noted that "Pioneer could sell the media more cheaply if they wanted to."

Compaq currently sells five Pentium 4 Presario PCs equipped with DVD-R drives and plans to add Athlon models. The entry-level DVD-R system--with 1.3GHz Pentium 4 processor, 256MB of RAM and 17-inch monitor--sells for $2,459.

Other PC makers are taking a more wait-and-see approach to DVD-R. Sources close to Dell Computer indicate it could soon add DVD-R drives to its Dimension line of consumer PCs.

Gateway is still weighing its options. "There is too much uncertainty right now about recording standards, and that could create problems later on," a Gateway spokeswoman said.

In addition, the standards battle is a serious issue, with no clear winner in sight. An earlier format, dubbed DVD-RAM, allows for the recording of computer data to DVDs. Later in the year, another rival, DVD+RW, is expected to reach the market. Hewlett-Packard, the undisputed retail CD-RW sales leader, is one of the major backers.

The problem with DVD-R and DVD+RW is "that the formats are not compatible," Craig said. That creates potential problems particularly for consumers shelling out $700 or more for external DVD-R drives. If DVD+RW wins out in the market, she said, "those early adopters could be out of luck."

Still DVD-R has big backers, an early lead to market and the potential to tap pent-up demand for DVD recording. But as demonstrated by the battle between VHS and Beta, nothing is certain.

"It's just too early to call a winner," Craig said.