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CD-RW drives for notebooks in short supply

Customers looking to burn music CDs on notebooks are finding recordable drives, and the laptop computers themselves, nearly impossible to come by.

Customers looking to burn music CDs on notebooks are finding recordable drives, and the laptop computers themselves, nearly impossible to come by.

In yet another chapter in the ongoing saga of component shortages, PC makers say there are virtually no CD-rewritable (CD-RW) drives to incorporate into already-announced notebooks that feature the popular option. Although CD-RWs may present yet another headache to the record industry, consumers love them.

Compaq Computer, Dell Computer and Gateway today confirmed they are having trouble obtaining slimline CD-RW drives, the slimmer version of CD-RW drives used in PCs. Gateway stopped selling the drives six weeks ago but hopes to resume shipments as early as next week.

Though the supply of notebook CD-RW drives is critically short, desktop counterparts have also become difficult--but not impossible--to find. The drives are generally used to put data or recorded music on a CD for playing in CD players.

The problem isn't so much demand, say executives and analysts, but supply. A shortage of RF amplifiers, chips that boost radio signals that are used inside the drives, has busted the manufacturing chain. Cell phones and handheld computers also contain RF amplifiers, which has exacerbated the supply problem as those devices grow in popularity.

As a result, drive inventory is so tight that some PC manufacturers have stopped selling notebook CD-RW drives, at least temporarily.

"There is something going on in the entire optical-drive industry, and that's a major component shortage," said Dataquest analyst Mary Craig. "It's not just an isolated problem, and there is no short-term relief, at least throughout the rest of the year and into next."

Consumer demand, of course, also plays a part. The rising popularity of MP3 music, combined with the decline of magnetic recordable storage options such as floppy disks, is rapidly transforming CD-RW drives from a luxury into a standard feature on consumer PCs.

While the record industry has come down hard on music distribution services such as Napster and, it has so far has steered clear of CD burners.

"I look at CD-RW as a definite problem for the music industry," said ARS analyst Matt Sargent. "If I was in the music industry and I had a legal way of deep-sixing CD-RW, I would do it in a second."

"But I would be surprised the music industry could have any effect," he continued. "I'm not sure what they could do over such a wide industry as the PC industry, especially since it's now a supply-and-demand issue. People really like these things."

As a short-term workaround, Gateway decided to ship notebooks without CD-RW drives and treat them as add-on orders to be fulfilled when units are available, said a company representative. The San Diego-based PC maker estimates that about 20 percent of notebooks it sells have CD-RW drives rather than CD-ROM or DVD drives.

"Compaq had expected the issue to come up, and it could have affected us more if we had not planned for it," said a representative of the Houston-based PC maker.

Sean McDonald, Dell's senior manager for Dimension and Inspiron peripherals, also acknowledged the problem. "There is an industry supply constraint right now that everybody is seeing," he said. "It's a supply problem, but demand is there to feed the supply."

Besides the immediate notebook CD-RW drive shortages, the larger units used in desktop PCs are increasingly difficult to find.

"There are chips from Hitachi and Toshiba that are in short supply, and there is no near-term relief," Craig said. Two of the largest CD-RW drive makers are "screaming for components, and they said they could practically double production, but they're dependant on Toshiba and Hitachi."

Although less dire, the shortage in desktop CD-RW drives could be more serious because of the increasing demand compared with that for slimline models. Of the 12.5 million CD-RW drives sold last year, only about 750,000 went into notebooks, according to research firm Dataquest. And demand for desktop CD-RW drives is increasing rapidly, with Dataquest projecting 29 million drives sold this year.

For companies such as Hewlett-Packard, which offers CD-RW drives in almost every consumer PC it sells, the shortage could mean trouble later on. One reason for HP beating out Compaq in retail PC sales is its CD-RW strategy, said PC Data analyst Stephen Baker. Overall, 40 percent of PCs sold at retail in June sported CD-RW drives.

Signs of the shortage can be best seen at retail, where stores are scrambling to stock CD-RW drives and prices have risen following a period of steep declines, Baker said. At the end of last year, CD-RW drives sold at retail for an average of $215. But the price has jumped dramatically to an average of $250 in the past four months.