DVD Won't Dominate Until 2001, Says Researcher

According to a new study, users probably won't embrace Digital Video Disk drives--battered by incompatibilities and the continued price/performance strength of CD technology--until after 2001.

Users are slow to adopt DVD drives because of incompatibilities among DVD formats and delays in drive availability, says a market research report from consulting firm Freeman Associates.

Rewritable DVD drive shipments, which began in 1998, totaled 137,000 units--a third of the quantity that Freeman Associates forecast last year, says Robert Abraham, coauthor of the report, "The Optical Storage Outlook." DVD's shipments were only a fraction of the 4.8 million CD-Rewritable (CD-RW) drives that shipped in 1998. Only 1.25 million DVD drives shipped in 1997, according to the report.

CD-RW Dominates

The "exploding" demand for CD-RW will continue until 2001 and impede DVD's short-term prospects, Abraham predicts.

CD-RW drive shipments dwarfed those of DVD drives because the latter have been slow to appear on the market. An alternative recordable format, DVD+RW, has incompatibilities with DVD drives, confusing the market, Abraham notes.

But despite its slow start, DVD technology's long-term prospects remain strong, Freeman Associates forecasts.

"The crossover point for when DVD products will overtake CD products will be 2001--a year later than we and other analysts had previously thought," Abraham says.

Under the Optical Storage Technology Association's supervision, optical digital companies are working to resolve incompatibilities among DVD formats. A read-compatibility specification will accelerate the demand for DVD products, says Abraham.

DVD drives are faster and have more than seven times the data capacity of CD-RW drives. Users who require great capacity and performance will naturally migrate to DVD products, Abraham said. "The question is, at what point does a company bite the bullet and upgrade from CD to DVD?"

In the future, CD-ROM technology will probably not be able to keep up with the performance levels DVD can achieve. Also, DVD product prices are still high compared to those of its CD counterparts, but are dropping rapidly, Abraham says.

Early adopters of DVD products are companies running applications for which capacity is more critical than cost, such as government agencies and entertainment businesses, Abraham said: "For a few more dollars, users can get a lot more storage capacity."

The continuing momentum behind CD products through 1998 was one surprising finding of the report, according to Abraham: "We discovered that CD products were not giving in to DVD technologies."

CD performance grew rapidly over the past two years while prices dropped dramatically, which didn't motivate consumers to move to DVD, the report concluded.

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