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Price War Moves Into DVD Portables Territory

1/09/2003 02:00:00 AM Eastern

While consumers marvel at the convenience of portable DVD players, retailers and manufacturers are floored at the category's precipitous price declines.

In late 2002 Wal-Mart, the 800-pound retail gorilla, offered a $197 Initial-branded portable DVD player with a 4-inch LCD screen, and a $296 step-up with a 5.8-inch panel.

The latest wave of Chinese-made video bargains caught many of the major Japanese manufacturers by surprise. They continued to offer higher-quality players for many hundreds of dollars more. Consider that when Panasonic introduced the first portable DVD player in 1998, it had a 5.8-inch screen and cost a cool $1,299.

The aggressive pricing has forced two formerly major players in portable DVD — Pioneer and Sharp — to leave the field, leaving other front line manufacturers scrambling to preserve a stake at the high-end of the market.

Despite the declining profitability, there will be no shortage of manufacturers willing to jump into this fiercely competitive arena at CES. Here's a rundown of what some of the more prominent brands will bring to Las Vegas.

APEX Digital is identified as the leader among the affordable Chinese DVD players. Now the company is planning to become a major player in the portable category, according to Steve Brothers, VP of sales. "We had limited success in 2002 because we had difficulty sourcing panels. Now we've secured a good supply and plan a major introduction at CES," he said.

The current model is the PD-10, with a 5.6-inch 4:3 screen. Early in 2003, they'll introduce a 4.5-inch 16:9 model for $199.

Also coming in the first half is a 5-inch 4:3, a 6.5W-inch 16:9, a 7W-inch 16:9 and an 8-inch 4:3. In the second half of the year, they'll introduce one with an 8W-inch 16:9 screen.

Audiovox, has been a major player in the category, and remains a high ranking market share player, according to Ralph Etna, Audiovox consumer goods group VP.

In 2003, the company plans to expand distribution with several new models including an entry-level 5.8-inch 16:9 (model D1530) at a $399 suggested retail. Audiovox will also "increase its number of higher-end units," including the D1830 with an 8-inch 16:9 screen for around $599. In the second half a 9-inch 16:9 unit will arrive for around $899 (D1930).

Panasonic, which was first introduce a portable DVD player, continues to lead the market in market share, according to Reid Sullivan, Panasonic Entertainment Group VP.

Sullivan said the flood of inexpensive players would grow the overall market, and he expects business to go up nicely.

"We see good growth on a unit level in 2003 and expect to grow our sales overall. It will be difficult to maintain a dominant share but our sales will grow as the pie gets bigger."

Panasonic will introduce one key model at the show — a $999 DVD-LX9. It features a 9-inch VGA screen, progressive scan output and a docking station. "Consumers can take the player on the road and when they come home put it in the docking station that is connected to a TV in the bedroom or living room," Sullivan said.

Later in the year, the company will offer models with five and 9-inch screens.

RCA currently has two models and will unveil a new one at the show, according to Randy Staggs, GM of global video product management. Staggs is realistic about the category: "Conceptually it's a niche market. We feel it will never be greater than 5-10 percent of the industry even though dollar sales will a bit better. Right now, it's a 2 percent industry, with 6-7 percent of the dollars."

Thomson is staking out a middle of the road position. "We haven't gone after the premium category and elected to focus on a quality experience at a reasonable price," such as a player with a 7W-inch 16:9 screen for a $499 minimum advertised price. "For us, smaller screens and lower quality do not deliver the right kind of viewing experience," he said.

Samsung, which was once a major player in low-end CE goods, isn't considering entering the $200 category. In fact, they're at the high-end and will stay there.

"We had tremendous success with the DVD L100, the only player on the market with 10W-inch 16:9 screen with progressive scan output," said J.R. de Souza, Digital A/V marketing manager. "It's also the only portable with a Memory Stick slot and it has a very cool design."

The unit costs $999 "and even at that high-end, it's done very, very well," he said.

At CES, Samsung will "most likely" unveil two replacements for L100. "You will see continued differentiation from us and we'll extend our leadership in terms of screen size," De Souza said. He was coy about the new screen size but expects it to be larger "because of our leadership in LCD space and manufacturing."

Toshiba will not play in the low-end of portable DVD market.

"We're at the high-end and we're staying there but realize the demographics of the market are changing," said Jodi Sally, Toshiba Video Products marketing director. She said the current SDP-2000 with a $799 MAP is the number-two best selling model because it has "the highest resolution 8.9W-inch screen in the industry, progressive scan output and is DVD audio compatible."

Sally said Toshiba will unveil the SD-P2500 featuring progressive scan output, DVD-Audio compatibility and "the industry's highest resolution LCD screen." It will have side mounted speakers, a slim design and SD/Smart Media memory card slot for JPEG images viewing.

Another offering (model SD-P1200) features a rubberized sport cabinet and a 7W-inch LCD screen for under $600.