Manufacturing costs have increased 35 percent this year because of patent royalty fees, rising production costs for petroleum-based plastics used to make optical media, as well as transportation costs to deliver products to warehouse and retail facilities, Memorex said in a statement Friday. Until now, the company said, Memorex has absorbed all of these increases instead of passing them on to customers.
"Due to our prime disc manufacturers' focus towards DVD discs and a lack of investment in new CD-R and CD-RW production facilities, production capacities can no longer meet consumer demand for CD media, and this trend is expected to continue into next year," Memorex CEO Michael Golacinski said in a statement. "We have no alternative but to pass on the increase in cost to our retailers now in order to maintain our commitment to deliver high quality blank media that both our consumers and retailers have learned to trust and depend upon."
Raising prices in the technology industry is not an easy task. Makers of liquid-crystal displays and memory have managed to increase prices temporarily at various times, but competition and excess capacity have typically reversed the trend. For example,technology by as much as 40 percent in January on expectations of a shortage. Instead, customers flocked to other suppliers, several analysts have said.
, higher than that of CDs, which store about 650MB. The extra capacity makes them more suitable for movies and other multimedia formats. Hewlett-Packard and other manufacturers have asserted that the time is right for DVD recording to take off. Retail sales figures indicate growing interest in the technology.
Santa Fe Springs, Calif.-based Memorex sells a range of data storage media products, including optical disks and CD labels. The company also sells other products such as DVD drives, CD drives and keyboards.