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DVD burning a hot ticket for laptops

Toshiba on Tuesday plans to unveil its first notebook capable of DVD burning. But an ongoing standards battle and other competition could throw some cold water on its plans.

    Toshiba on Tuesday will join competitor Sony in shipping high-end notebooks with drives capable of burning DVDs.

    The move comes as PC makers look to revive sluggish sales and to repeat the CD-rewritable boom that fueled the last wave of computer upgrades.

    "This is certainly going to better position Toshiba's and Sony's notebooks at retail," IDC analyst Alan Promisel said. "It could give a small boost to notebook sales during the holiday season."

    The new model, the Satellite 5205-S703, will feature a DVD-R/RW drive and sell for $2,699. The laptop comes with a 2GHz Pentium 4-M processor, 15-inch UXGA display, a 60GB hard drive, a DVD recording drive, 512MB of SDRAM, a 64MB Nvidia GeForce4 460 Go graphics accelerator, three USB 2.0 ports and a FireWire port. The laptop runs on the Windows XP home edition operating system.

    As previously reported, Sony offers two notebooks with DVD burning capabilities. Both models come with a 2GHz Pentium 4-M processor, a 16.1-inch UXGA display and 512MB of RAM. The low-end Vaio PCG-GRX670 includes a 40GB hard drive and sells for $2,500, while the Vaio PCG-GRX690 includes a 60GB hard drive and sells for $2,800.

    Manufacturers are betting big on DVD recording PCs for this holiday season, only the second year the technology has appeared on desktop computers. Over the past two years, DVD recording drive prices have dropped from $1,000 to under $300, while discs have fallen to $5 from about $25.

    NPDTechworld analyst Stephen Baker said he expects DVD recording drives to ship on anywhere from "25 percent to 33 percent of PCs by the end of the year. We're right at the tipping point where DVD burning really takes off."

    Adding DVD recording to notebooks makes sense for a number of reasons, analysts say. On one hand, notebook sales are doing much better than desktops. DVD recording could help spur sales of high-end models favored by early adopters.

    "The margins on these notebooks are fantastic for vendors," Promisel said.

    DVD recording "certainly migrated into portables faster than CD burning did," Baker said. "It kind of shows how hopeful all the PC makers are. DVD burning is an application people are willing to upgrade to."

    Sony is hoping to capitalize on computer power that exceeds the needs of the software, but is just right for working with video.

    "If you look at motion picture kind of products, which is kind of a common thing for consumers, those kind of things are almost 10 years old," said Yoshi Oguchi, Sony's senior manager of Vaio notebook marketing. "It's the time when the PC is catching up with those kinds of technologies. It's a perfect combination."

    The biggest gain from DVD recording on notebooks may have little to do with sales. Particularly in the fast-paced notebook market, the perception of having the newest, most innovative technologies is crucial to successfully building brand awareness, analysts say.

    "I think the vendors who come out with DVD recording this holiday season stand to gain quite profitably," ARS analyst Matt Sargent said. "It's very important to be perceived as cutting edge. Those vendors stand to gain a huge advantage for their brands, even if they never sell one notebook."

    But even as DVD recording moves to notebooks, CD-RW's dominance is increasing. The success of CD-RW means cheaper drives for computer manufacturers and consumers, and lower-cost discs. The average price for CD-R discs is 38 cents--but can be as low as 5 cents when purchased in bulk, according to NPDTechworld. DVD-R and DVD+R discs sell for $3 each or less and blank DVD-RW and DVD+RW discs for about $5 each when bought in bulk.

    "Some of the opportunity in the DVD burning market has been blunted a bit by the rapid price decline in CD-rewritable drives and media," Baker said. "That creates some impediment for DVD burners to replace CD-RW drives compared to CD-rewritable replacing CD-ROMs."

    CD-RW drive prices are down 50 percent year over year, according to NPDTechworld. At retail, drives sell for an average of $90.

    Format war ferments
    The release of the Sony and Toshiba notebooks could rekindle the format war being fought by supporters of DVD-R/RW and competing DVD+R/RW.

    Pioneer brought DVD-R/RW drives to market in early 2001, more than six months ahead of DVD+R/RW drives. The upstart quickly garnered momentum from the DVD-R/RW format, which Apple Computer and Compaq Computer had started shipping in consumer computers.

    The two top PC manufacturers, Dell Computer and Hewlett-Packard, however, opted for DVD+R/RW and Microsoft endorsed the standard for future versions of Windows. This support stacked the deck in favor of DVD+R/RW, say analysts.

    But once again, the DVD-R/RW format has leaped ahead. Notebook DVD+RW drives are as much as six months away, manufacturers concede. Toshiba unveiled a notebook drive supporting DVD-R/RW in September.

    "This is going to push DVD-RW ahead of DVD+RW," Promisel said. "For the time being, it could help other vendors that backed DVD+RW to at least temporarily switch to DVD-RW."

    But biggest supporters Dell and HP are willing to sacrifice holiday sales and hold out for DVD+R/RW. Representatives for both companies said they would offer notebooks with drives supporting the format sometime early next year.

    "We decided to go with DVD+RW because of some of the advantages the format offers," a Dell representative said of the company's original decision on the desktop. "We thought it would be confusing for customers to support DVD-RW right now on notebooks so we decided to wait for DVD+RW."

    But ARS' Sargent wonders if DVD+R/RW holdouts are making a mistake. "I think it's very interesting that at least three vendors chose to wait for DVD+R/RW. I'm not sure I would want to be one of the companies deciding not to jump on this wave with the others," he said.

    Consumers aren't likely to be a casualty of the format war, no matter which side ultimately wins. Unlike the Betamax and VHS wars of the 1980s, where different size tapes could only be played in one type of player, most PCs and many DVD players can read discs created in either format. Software developers have made sure their DVD authoring applications support both applications, too.

    Still, the scuffle is surprising, analysts say, as there technically is very little difference between the two formats. September talks between DVD-R/RW and DVD+R/RW backers ended without a compromise. Sony took the high road by releasing a drive that will write discs using either format.

    Interestingly, Sony could eventually back both formats on notebooks, too, offering DVD+RW when it's available.

    "As the technology evolves, and if it makes sense to put it in our notebooks, we should be considering it," Oguchi said.

    In what analysts describe as an ironic twist, the two early adopters offering DVD drives on the desktop will trail competitors on notebooks. HP quickly dumped DVD-R/RW from Compaq consumer PCs soon after buying the company. That hitches the former Compaq's Presario notebooks to HP's DVD+R/RW bandwagon.

    Apple's problem is more technical. The company's Titanium PowerBook uses a slot-loading optical drive design rather than the more typical tray. Because of this approach, the PowerBook trailed competing PC notebooks and even Apple's own consumer iBook with CD-RW and CD-RW/DVD combo drives.

    The situation would appear to be the same for DVD recording drives. Greg Joswiak, senior director of Apple's worldwide hardware product marketing, could not estimate when DVD recording drives would be available on the PowerBook.

    "We'll offer them as soon as the slot-loading drives are available," he said.

    But Promisel said he hadn't seen any plans from vendors to release a slot-loading DVD drive. With Apple's emphasis on content creation, falling behind in DVD recording on notebooks is a problem.

    "It's certainly an issue on their PowerBook line," he said. "PowerBook sales have been really suffering and DVD recording could really help."

    PowerBook sales plunged 38 percent as measured in units and 39 percent in dollars from Apple's third to fourth fiscal quarter, ended Sept. 30.