The largest vendor of CD rewriteable drives, Hewlett-Packard Co., will phase out its entire retail CD+RW product line by the end of the year in favor of rewriteable DVDs.
The news caught analysts by surprise, since the rewriteable CD market is still booming. But stronger competition in the rewriteable CD market is forcing HP out, they said. HP executives, meanwhile, claimed the move was driven by customer demand.
HP will introduce one more revision of its CD-writer product line this fall, and then leave retailers to clear out the remaining inventory over the next few months. "Shortly into 2002, the CD-writer will disappear from store shelves," said a spokeswoman for HP, Palo Alto, Calif.
HP will still continue to offer rewriteable CD drives in select Pavilion PCs and workstations, according to John Spofford, vice-president and general manager of HPs Consumer Entertainment Solutions Group in Loveland, Colo. "There is no given endpoint," he said when asked how long HP PCs would feature rewriteable CD capability.
"I dont see it as premature at all," Spofford said of the transition. "Were still in the CD-RW business. Our choice is to refocus the aftermarket from CD-RW to DVD+RW…HP has always paid considerable attention to our customer base, and designed our (products) capabilities to meet their needs."
"I think HP makes a point of staying in close touch with customers and what the trends are," Spofford added. "The killer app for the CD writer was digital music. (With DVD), a broader range of video editing is easier than people think. If a user has a digital still camera, hes still looking for ways to share those images and preserve those images. Video cant be preserved on a diskette."
Future products, such as the HP DVD100i, also contain CD-RW and DVD+RW capability, he said. That drive was formally introduced in August, and is estimated to hit retailers this month. The 8X DVD read/2.4X DVD rewrite/12X CD-R write/10X CD-RW rewrite/ 32X CD read is priced at $599, and was scheduled to be available at retailers last month. However, Best Buy.com does not currently list the drive.
HP does not manufacture its own optical drives, instead relabeling drives originally manufactured from an undisclosed number of suppliers. But during 2000 HP was responsible for 16 percent of all optical drives sold, making it the worldwide leader, according to the Santa Clara Consulting Group, Santa Clara, Calif.
That figure is even more significant because HP does not sell drives to third-party PC OEMs, usually the bulk of a suppliers shipments. In retail alone, HP controlled 30 percent of all branded optical products worldwide, Santa Clara Consulting found. The figure is slightly smaller in the Americas, where the fight between HP and companies like Philips and LG Electronics is more intense.
Some observers have always found the debate between CD and DVD slightly bizarre. While CD-ROMs are widely used to distribute software and CDs are sold in record stores, virtually no content save copyrighted movies are distributed on DVD. However, analyst Mary Bourdon of Gartner Inc., San Jose, estimated that 90 percent of consumer PCs are sold with some form of DVD.
"Whats the advantage of a DVD recorder? Video," added Dave Bunzel of the Santa Clara Consulting Group. "But DVD also offers PC OEMs the opportunity to potentially add more RAM, a bigger hard drive, and faster processors. A lot of companies are anxious to take people to the next level, to give them a reason to upgrade."
Its also possible, analysts admitted, that competition in the rewriteable CD market forced HP out. The packaging, merchandising and other promotions HP offers brings with it additional cost, and analysts suspected more consumers were simply choosing "white-box", cheaper alternatives.
But the transition will be tricky. "They have to leap to a new horse in midstream without shooting the old horse," Bourdon said.