CD Technology: Holding On In The Storage Market

Do you remember the Beta versus VHS home video recorder war in the early 1980s? If so, then you can understand the reluctance of software vendors to get behind an unofficial DVD (digital videodisk) standard. While a DVD is identical to a CD in size and shape, DVDs can store up to seven times the data of a CD. Several manufacturers are currently creating their own versions of DVD drives and recorders in an effort to gain early market share. A manufacturer which can control the market in the early stages of the technology may be able to create a de facto standard. A de facto hardware standard is not official, but is considered to be the standard of choice by most users.

With multiple competing DVD hardware formats, software vendors have two choices. The first is to support every DVD hardware format as each becomes available. The second option is to back a particular DVD format and hope that it becomes the de facto standard. "It is kind of a catch-22," states Robert Weiner, vice president of product marketing at Optical Technology Group (OTG) located in Bethesda, MD. "When you support multiple standards, that increases your cost of development and you also have to write more code. However, you don't want to choose the wrong standard. Choosing the wrong standard could throw off your sales numbers and cost you your position in the market."

The Role Of CD-R
While DVD is the next step in CD technology, most vendors agree it will be some time before CD-ROMs go the way of the 5.25-inch floppy disk. Jonathan Bradlee, president of MediaForm (Exton, PA), predicts it will be at least three years before DVD technology becomes dominant over CD. "It will be a slow migration for end users from CD to DVD," comments Bradlee. "Most end users have recently invested in CD technology and DVD technology is still very expensive. You can buy a CD duplication system for under $3,000 and a DVD-R drive costs about $17,000. The price of DVD technology is going to have to drop significantly for this technology to be adopted on a large scale."

Serving A DVD Customer Base
The cost of DVD technology and current end-user investment in CD technology may lessen the customer demand for DVD technology. Marc Sarbarneck, director of business development at Integrated Network Solutions (Irvine, CA), does not currently see a large end-user demand for DVD technology. "It does not make sense for a VAR to make a financial or time investment in DVD if the customer base is not there yet," says Sarbarneck. "VARs should certainly try to learn as much as possible about DVD technology as pieces of hardware are released to the market. However, DVD is still very new and expensive. It is not as universally embraced as CD technology."

However, Gary Brach, president of Smart Storage (Andover, MA), says software vendors are already working on support for multiple formats of DVD technology. "Software vendors will be ahead of jukebox manufacturers, for example, in regard to DVD recording and rewritable technology," states Brach. "There are significant issues that need to be resolved in terms of drive support, media handling, and loading issues. These issues need to be resolved before DVD technology can be considered robust."

The High Cost Of DVD
Finding end users that have a need for the capacities of DVD technology and can afford it may be difficult for VARs. "DVD-R technologies provide substantially greater capacities than CD-R, but most CD-R applications are not straining the capacities of the medium. For those applications that require much greater capacity than CD-R, it is still difficult to make the case that DVD technology will be more cost-effective than CD-R," states Young.

According to Weiner of OTG, VARs should consider three aspects concerning DVD technology. The first is whether end users can afford DVD technology right now and whether it is required for a solution. Secondly, VARs have to understand what is driving the need for DVD technology. Weiner says the technology was developed primarily for multimedia storage applications. This being the case, he says multimedia applications for DVD make more sense than data storage. Finally, VARs should be aware of the potential margins on DVD technology. "End users are only going to pay so much for DVD technology," states Weiner. "Even though the prices are high for the technology, it does not necessarily mean the margins will also be high for the VAR."