DVD-R Market Set To Explode As Recorder Prices Plummet

The DVD market has just taken a tremendous step forward, with the price of DVD-R recorders falling from $5,000 to around $500 almost overnight. That is expected to make the recorder much more popular with cost conscious end users. "The solutions we sell, that used to be very expensive, have now become more in-line with our CD-R products," said David Suden, CTO at Edina, MN-based Rimage Corporation. Rimage sells storage solutions that incorporate the DVD-R recorder.

Suden believes the reason for the price drop was Pioneer's slashing prices to land a couple of key OEM agreements with Apple and Compaq. "In order to win those deals, they had to dramatically lower the price point," he said. "The good news for VARs is that the move will open up new markets for DVD-R." Suden believes the lower price also means the technology can now be more readily incorporated into any storage installation.

"We have seen VARs that are selling CD-R products embrace DVD-R pretty rapidly," he said. "This is particularly true in the area of archiving. Since the events of September 11, I suspect archiving has become a more interesting topic. And that also makes DVD all the more interesting. It is permanent, it is non-erasable, and now it is relatively affordable. It's a great way to create an off-site archive. We were already seeing strong demand for DVD-R; at this new price point we expect to see that demand increase substantially."

Corporate Video Will Embrace DVD
Aside from archiving, Suden believes video will be another hot application for DVD. One of the areas he feels VARs may want to look into is corporate video, including training videos and marketing materials. "If you put video on a CD-R, where are you going to play it?" he asked. "You can play it on your computer, but there isn't really any player that will play back video content on a CD. With DVD, you can play it in your home or in the office on a television set with a standard DVD player. You can also play it on your computer, which gives it a much broader market."

Aside from price, Suden believes capacity will continue to be a key driver for DVD. "DVD-R is 4.7 gigabytes, as opposed to only 650 megabytes for CD," he said. With its higher capacity, DVD-R media is still more expensive than CD-R. However, that too is dropping rapidly in price. CD-R media currently sells for less than $1, while DVD-R media is just under $10. Nine months ago that same DVD-R media was selling for $30.

Suden, however, does not expect to see DVD-R replacing CD-R. "Whenever capacity is an issue, DVD-R is a more interesting solution," he said. "Capacity is not an issue in a lot of the CD applications. CD sales have been growing as well, and we expect that to continue."

Jukeboxes Will See Price Cuts As Well
Kevin Byrne, director of channel sales at Milpitas, CA-based DISC, Inc., notes that with the price of recorders coming down, the price of jukeboxes incorporating those devices will also fall. Because automation companies may use a couple of those drives in any jukebox, the price is reduced even further. "We are seeing great reductions in the price of jukeboxes incorporating that technology," he said. "The real ramification of the lower prices is broad-based acceptance and standardization of the technology. The DVD-R drive prices, as well as the price of the media, are coming down because of the increased installed base."

Byrne believes CD-R was widely accepted because it very quickly became a standard that end users fully expected would be around in 5 or 10 years. The same is now true of DVD-R. He agrees that the increased capacity of DVD will be as big a driver of sales as the lower pricing. "With drive prices falling to the level of CD-R drives, the end user gets a tremendous boost in capacity with only a minor increase in cost," he said.

Byrne believes the higher capacity of DVD has come along at a time when the amount of information that companies need to store and archive continues to grow exponentially. "Five years ago, no one needed to archive e-mails," he said. "Today every government agency and every company that wants to do business with the government has to comply with some kind of e-mail archiving system."

Two other areas that may see growth in DVD installations are records management and transaction management, especially in financial institutions. "All of that is now done in an electronic environment," said Byrne. "All of that data needs to be archived somewhere. The events of September 11 have created a heightened awareness, in the enterprise and government levels, of the need to not only safely and securely archive the data, but to do it in more than one location. There is a large upswing in the number of government agencies that are now looking at archival storage systems."