History 2002: CD-R/RW Drives Grow 41% in 2001

CD-R/RW is the leading removable storage technology in the computer industry, with overall sales of $5.2 billion in 2001, according to the Santa Clara Consulting Group.

CD-R/RW writer sales continued to be strong, with unit sales increasing more than 41%. Media unit sales grew by 51%, but continued price degradation limited revenue growth to 6%.

Writer sales declines in 2001, for the first time
Writer sales were inconsistent during the year with a decline in the second quarter, the first since the industry started in the mid-90s. This resulted in more aggressive pricing, limiting revenue growth for the industry. Growth resumed in 3Q and the industry finished strong in the fourth quarter. PC OEMs, who were expecting a weak 4Q, found it difficult to obtain adequate writers to support the holiday season. Worldwide drive sales increased to 45.4 million in 2001.

The business is fragmented, with five major speeds of writers sold during the year.

The 8X units were the preferred product for the PC OEM market and maintained the most significant volume during the year, representing 34% of sales. This started to transition in late 2001, with 12X writers (24%) and 16X (22%) becoming important products.

The >16X segment (20X, 24X, and 32X) also saw strong growth in the second half of the year, representing 9% of the market.

4X writers (9%) are no longer manufactured, but they continued to have a share because vendors sold higher-speed drives (8X and 12X) rated as 4X in external drives supporting the USB interface.

EC anti-dumping did not have impact on pricing
Disc media continued to see a combination of strong growth and low pricing. Legal issues relating to license fees and anti-dumping investigation and rulings in Europe were important factors in the market. The license fees that Taiwan-based manufacturers agreed to pay stabilized and even increased pricing in 2Q, but by 3Q oversupply contributed to a decline again. The anti-dumping legislation ruled by the EC late in 2001 did not have an significant impact on pricing. Taiwan vendors had already established large inventories in Europe which should support market demand for 1Q and part of 2Q02.

It is now estimated that there is 31% more supply than demand for CD-R discs.

Taiwan dominates manufacturing for CD-R discs, now representing 63% of global capacity. India will be a more important factor, with Moser Baer ramping production.

DVD-RW prime beneficiary DVD recordable drives started shipping in reasonable volume in 2001 with DVD-RW being the prime beneficiary of this trend in the early part of the year and DVD+RW drives shipping in the fourth quarter. High-end PCs produced by Apple, Compaq, HP, and Sony started to line-fit these drives during the year. The CD writer business will decline in the future as the market shifts to some form of DVD storage technology.

This article is an abstract of news published on issue 174 on January 2002 from the former paper version of Computer Data Storage Newsletter.