Hardware Wars
How low can DVD hardware go? Opening-price wars push limit - CE & Entertainment
With DVD players now selling for as little as $49, it appears the price of standard players has hit bottom after just five years on the market. Now the question is how fast prices will fall on higher-end models like DVD recorders and portable units.
While analysts don't expect prices to spiral down as quickly as they did with regular DVD players--where units priced at $300 a few years ago now sell for about $100--they're expected to fall gradually with increased consumer demand and the arrival of better technology.
The first DVD players with the ability to record on blank discs hit the market in 2001 at a price just under $1,000. Sales of DVD recorders have been slow so far (the Consumer Electronics Association doesn't even track their sales separately yet), but prices are already dropping.
"You're seeing some models priced at $599 now and you'll probably see some as low as $400 by this time next year," said Ryan Jones, an analyst with The Yankee Group in Boston. "But it will probably be 2004 before they're priced at a level where they'll really start to move."
Hardware prices usually fall as consumer demand rises but improved technology can also play a role. That's been the case with some DVD recorders. "You have some companies coming up with more efficient chips, and now you have players with one chip doing what six or seven chips did before," said Jones. "So there's been some integration that's made them cheaper to manufacture and it's helped bring down costs."
The market for portable DVD players is also emerging as travelers are taking home entertainment on the road. They range from $300 for basic "DVD in a bag" models to $1,000 for units like a Samsung player that sports a 10-inch screen and can be hung from an interior car roof. Portable players are likely to remain a niche product sought out by frequent travelers and parents who want to keep kids entertained in the back seat of the car. "The utility of having a player that keeps kids quiet during long trips is a real attraction," said Jones.
DVD/VCR combo decks are also becoming popular. "Manufacturers shipped 2.8 million combo units in the first 11 months of 2002 and 532,000 in November alone," said Sean Wargo, senior industry analyst with the Consumer Electronics Association. And the demand has produced lower prices. While most combo units were in the range of $250 to $300 in 2001, they've dropped considerably this year. Zenith's combo player is now selling for $199 and some lesser-name brands are available for as low as $149.
The real buzz in DVD hardware this year will surround "blue laser" technology that will enable DVD players to deliver high-definition picture quality. "It's going to be the DVD version of digital VHS," said Wargo. "It will deliver higher resolution images and allow studios to make high-definition DVDs."
While there may be demo models of the new players at this year's Consumer Electronics Show in Las Vegas Jan. 9 to 12, consumers probably won't see them until late '03. "They're debuting in Japan in the second quarter of this year, so we'll probably see them here by the third or fourth quarter," said Wargo, noting that blue laser players will be backward compatible and able to play standard DVDs.
The high-definition DVD players will probably debut with a hefty price tag that could be as high as $1,500. "But you never know. You could see some manufacturers come right out of the box with an $800 player," said Wargo.
When blue laser does arrive, it will be one instance where DVD has come late to the party. "The market for high-definition TVs is really being driven right now by the TV and cable networks making more high-definition content available," said Jones. "So that means DVD will be playing catch-up for a change."
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