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Expect DVD Chip Price Wars
prostoalex writes "With more companies developing the chips for DVD players the price wars might ensue. According to this DigiTimes report, 'Boosted by rising shipments, the higher price of DVD player single-chips is likely to push up the average chip price to US$9.56 in the fourth quarter from US$8.58 in the first half. However, the increasing number of chip suppliers also implies that a new price war may soon develop'. The predictions of DVD chips sales slowing down add to the expectations for price wars."
FYI, the royalties for DVD proprietary standard are much more than all chipmakers' profits, or the end product makers' profits for that matter.
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Who buys the most players? Is it the US? Singapore? China? More importantly, are the major markets for players doing well financially?
I'd say that drops in chip prices are all well and good, but the bottom line is price is going to be dictated by both demand, and what the market can bear in terms of durable goods.
Does anyone remember what the computer makers predicted for this quarter and what actually happened? Sales didn't just stay flat, in many cases compared to projections they nosedived. Durable goods are just that. Durable. Long term. You can only buy so many. Unless there is a compelling reason to upgrade, most people don't.
So who IS the major "market" for the players? Anyone have any good links/data?
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I'm less than excited. My last DVD player cost me $90. Yes, $90, new. How much cheaper can they get? Are they going to replace the increasingly poor prizes crackerjack boxes have had to resort to?
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I think one factor that not that many people talk about is the fact that the latest generation of graphics cards can do hardware acceleration at a pretty high level (at least both hardware motion compensation and Inverse Discrete Cosine Tranform) for decoding MPEG-2 video streams from DVD movies.
ATI has been doing this since their Rage 128 chipset arrived around 1999; nVidia's GeForce4 MX and GeForce4 Ti also do this now, and Matrox's Parhelia board do it now, too.
In short, the market for seperate DVD decoding boards has pretty much vanished on the desktop and laptop computer market.
It's interesting watching the evolution of DVD in the marketplace since I was involved in it during its infancy. I wonder how long before the grip of the DVD Consortum "Gang of Ten" is finally broken.
The history of DVD offers an object lesson in old rivalaries, protectionism and national politics, battles which still rage on today. It's as if we're still fighting WWII.
The key battle seems to be between Japan and China. The Japanese missed the boat on Video CD, only to watch Philips and C-Cube walk away with the prize in China. By fostering SVCD (Chaoji) as a low-cost (and no-license) alternative to DVD, the Chinese seemed determined to hose Japan again. Under this pressure, the Japanese countered by - slowly - offering DVD technology transfers though joint ventures and though US trade bullying on 'piracy' (which we all know is more about market control than it is about copyright.)
The DVD format is about seven years old now. As prices continue to drop and worldwide DVD player demand slackens, I have to wonder how long that lucrative (and onerous) DVD licensing scheme is going to last.
As it stands now, I think it's possible to make a DVD player without a single component from an original DVD Consortium memmber. They have no value-add anymore.
The Consortium's hammerlock on DVD persists though Hollywood's dominance of content in that format. But, Hollywood is getting more competition from indigenous material - notably in huge markets like India and China - the very material that helped propel Video CD. With Hollywood's recent product becoming increasingly parochial and cliche', one has to wonder how long before its grip, too, is softened in the non-US markets.
One way for the Consortium to add value is to offer a meaningful technology upgrade to DVD. But, there's no reason that it has to come from a DVD Consortium member. What if, for example, China mastered and deployed blue laser technology and high-density disc pressing to go with it, giving them the lead in HD format? It could be Video CD and SVCD all over again.
Here's another scenario: what if a net-new standard-def format (say, MPEG-4 with HTML-based navigation) was developed somewhere and introduced in China, as an upgrade to SVCD? What if it used its own high-density media that could be manufactured on DVD production lines? I could see China threatening exactly that.
- dvd_tude