Makers of DVD recorders in Taiwan are ramping up production as tumbling prices encourage people to replace aging tape-based recorders.
Analysts said companies such as Lite-On IT and Mustek Systems will sell four times as many DVD recorders in 2004 than in 2003, after retail prices halved in the past year.
That will make Taiwan the No. 2 supplier in the $4.3 billion industry behind Japan, where companies such as Matsushita Electric Industrial (the maker of Panasonic-branded electronics), Sony and Toshiba control half the global market.
"The industry momentum is strong now, and we're also optimistic on next year's demand," said Ting Chien, a spokesman for Lite-On IT, which is a unit of Lite-On Technology.
The company, Taiwan's largest DVD recorder maker and a supplier to U.S. retail giant Wal-Mart Stores, expects to ship 1 million units this year, up from 100,000 last year. That would help revenue rise by 20 percent to 25 percent to T$54.4 billion ($1.6 billion), the company has said.
Lite-On IT mainly produces optical disk drives for computers and diversified into DVD recorder manufacturing only last year.
DVD recorders offer higher-quality pictures than video cassette recorders, and the discs take up less storage space and are easier to search through than tapes. But DVD recorders were prohibitively expensive for most consumers until recently.
The average selling price of a basic DVD recorder in Taiwan is now around $180--still much pricier than a nonrecordable DVD player at $30, but down from $360 in mid-2003, according to Taiwan's Market Intelligence Center (MIC).
U.S. prices start at around $200 online, while a Lite-On recorder in the United Kingdom retails at a pricier 150 pounds ($279).
"You had to pay more than $1,000 for a DVD recorder when it was first launched in Japan a couple years ago. Check the price tag now and you will know why it's becoming popular," said Arthur Lai, a technology analyst at MIC, a state-funded industry think-tank.
Lai said prices could fall to US$100 in the first half of next year.
Global shipments are estimated to climb to 47.4 million units in 2008 from 12.3 million units in 2004. Taiwan's market share will double to 20 percent this year, overtaking 11 percent for all of Europe, estimated MIC.
Lite-On IT, Mustek and smaller rivals such as Sampo, Protop Innotech and Ya Hsin Industrial are expected to churn out a combined 3 million DVD recorders in 2004, compared with 742,000 in 2003, MIC said.
Still, Taiwanese companies need to start making recorders that also include hard-disk drives, or HDDs, to close the gap with Japanese competitors.
DVD/HDD recorders, which retail at more than $400, enable people to record many hours of digitally compressed video on hard disks and then transfer to DVD only the programs they want to keep for repeated viewing. Lai sees prices falling by a fifth next year.
"DVD/HDD recorders will be the mainstream product next year if their prices become cheaper, so Taiwan companies have to focus more on the sector," said Ken Yu, who follows the DVD recorder industry for SinoPac Securities.
Yu said nearly all DVD/HDD recorders are made by Japanese companies, and around 60 percent of recorders sold in Japan are DVD/HDD models. Lite-On IT will be the first Taiwanese company to launch these devices later this month.
Story Copyright © 2004 Reuters Limited. All rights reserved.
