Rewritable CD sales up on digital music demand

Consumers crave the rewriting technology so much that some PC manufacturers are scrambling to replace standard CD-ROM drives with CD-RW. Others have added rewritable drives to their notebook lines. The technology can be used for anything from archiving data to making music CDs.

CD-RW is also set to break into the lucrative sub-$1,000 PC market with Compaq offering the drives on systems just above this price, while Hewlett-Packard will come in well below it.

The groundswell around CD-RW drives has grown steadily throughout the year.

In July, only 1.7 percent of PCs sold at retail came with CD-RW drives, according to market researcher PC Data. The number had more than doubled to 3.8 percent in August and climbed to 7.8 percent and 19 percent, respectively, in September and October.

"For Christmas, you see greater sales of higher-end systems anyway, vs. $500 computers, and they more typically now have CD-RW drives," said PC Data analyst Stephen Baker. "There's no reason not to see 30 percent or more of systems sold with CD-RW in December."

Some PC makers already have pushed beyond that percentage. About 40 percent of HP Pavilion PCs sold in October came with CD-RW drives, according to PC Data.

"Consumers are very attracted to having the kind of capabilities offered by CD-RW, whether it be music, putting photos on the disk or regular backup," said HP's Ray Aldrich. "It's a cheaper, easier medium to use."

Five of the last six consumer models introduced by Palo Alto, Calif.-based HP pack CD-RW drives, which replaced CD-ROM drives on some systems.

"We haven't completely switched yet, but it's valuable enough that many customers expect it," Aldrich said. "We're trying to catch the interest in this whole Internet music category."

HP is not just adding the drives. In October, the company started bundling an MP3 player with some systems and offered 10 free songs from EMusic.com. MP3 music has generated both widespread consumer interest as well as criticism from the recording industry because of the ease with which consumers can download pirated--and also legal--songs.

HP's success selling CD-RW Pavilions has helped boost its position in the consumer market, with some analysts predicting it will overtake Compaq Computer.

Part of HP's success comes from offering CD-RW on sub-$1,000 systems, Baker said. The Pavilion 6540c, at $849, is the lowest-priced, mainstream consumer PC with CD-RW.

Meanwhile, DVD drives are also being seen in more systems. James Porter, president of DiskTrend, a market researcher covering storage, said PC makers offering DVD drives in lower-cost systems are helping the technology reach critical mass.

Compaq is also betting big on CD-RW, with 10 of the 11 models in its Presario 5800 series packing the drives, and most with DVD drives as well. Its lowest-cost Presario with CD-RW, which includes a DVD drive, goes for about $1,200.

MicronPC also reports customers increasingly ordering CD-RW drives with new PCs, particularly on its high-end Millennia Max line.

Dell would not disclose exact figures, but representative Tad Druart said: "We expected attach rates to be much higher than industry projections, and we've met our expectations." The attach rate is essentially the rate at which consumers add or "attach" items, such as a CD-RW drive, on to the core computer purchase.

Not all PC makers are seeing this much demand. Gateway, for example, reports only about 15 percent of its consumer systems go out with CD-RW drives.

"We're seeing very few people replacing CD-ROM or DVD drives with CD-RW," said Mike Ritter, Gateway's director of consumer product marketing. "We're seeing a very, very high attach rate of people getting DVD with CD-RW. That's the favorite combination."

Gateway also offers a CD-RW drive on its Solo 9300 notebook, "which far exceeds our expectations," Ritter said. "We thought it would be a nicety, but looking back, it makes a lot of sense."

Other signs of the CD-RW's emergence are everywhere: Write-once media prices dropped below $1 a disc, making it more affordable than high-capacity floppies, such as Zip and SuperDisk, which cost 10 times more. Philips, a major supplier of CD-RW drives to PC makers, said last week it now ships 1 million of the drives each month. Standalone CD-RW drive sales revenue doubled October to October and unit sales increased 2.5 times, according to PC Data.