History 2000: CD-R/RW Leading Removable Storage Technology

“CD-R/RW has become the leading removable storage technology in the computer industry, with overall sales of $3,88 million in 1999,” wrote David Bunzel, director of the Santa Clara Consulting Group, in its most recent CD Tracker newsletter which analyzes the trends for CD-R/RW writer and media markets.

CD-R/RW drives saw impressive gains in unit sales, more than doubling in volume. Media unit sales grew by 127%, but rapid price degradation kept revenue growth at a more modest 91%. Writer sales were somewhat constrained during the year by availability. Nevertheless, the market continued to increase throughout 1999, resulting in sales of more than 14 million units.

4X writers have become the commodity product in the market, representing 67% of the sales. With street prices for 4X devices below $200, there was considerably more interest in this technology by corporate and desktop users than in the past. 4X writers are expected to be the preferred product for the PC-OEM market for the next year, offering the best balance of price, performance, and compatibility.

Writers in the >4X range registered significant growth during the year and now represent 17% of total unit sales.

Disk media went from tight supply at the start of 1999 to oversupply by the end of the year. Pricing, which had been relatively stable for the first 6 months, dropped dramatically, especially in the fourth quarter. It is now estimated that there is 74% more supply than demand for CD-R disks.

Most of the name brands are sourcing disks from Taiwan. Some of these companies have decided to take advantage of lower costs to become more aggressive in the market, reducing the price premium that “A brands” enjoyed with this product in the past. The country dominates manufacturing for CD-R disks, now representing 67% of global capacity.

One of the more important developments during 1999 was the significant increase in writer sales to PC OEMs. Most of the major PC manufacturers are providing CD-RW writers as either an option or line-fit component; this segment represented 20% of total writer sales.

Compaq and Hewlett-Packard were aggressively marketing CD-RW technology in their PCs and by the end of the year were including writers in systems priced at less than $1,000.

DVD recordable technology has become less interesting to the market, with CD-RW offering a more cost-effective solution.

While DVD-RAM was shipping to the market, volumes were quite small in 1999.

In 2000, the main issue may be component shortages for writers. There is significant competition in world markets for various integrated circuits used in CD writers. This will keep sales lower than factory capacities for most of the year.

In 2000, SCCG forecasts that over 30 million writers will be sold on a global basis. This will be influenced by the ability of writer manufacturers to source enough components to support available production levels.

This article is an abstract of news published on issue 147 on April 2000 from the former paper version of Computer Data Storage Newsletter.