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Pioneer: DVD Burning, Video Editing Will Boost PC Sales

The PC industry must look toward DVD burners being used as video editing devices to revitalize sales, said an executive from Pioneer Electronics, but the utter confusion created by the competing formats continues to be a serious industry concern.

Video editing is now one of the most popular home applications for PC owners and the primary application used with DVD burners, according to an IDC study. The drives have the potential to be the next killer application to attract PC customers if PC vendors play their cards correctly, said Andrew Parsons, senior VP of Pioneer’s business solutions division.

“The PC replacement cycle has run out of steam and it’s our perception that a new application is needed to revitalize the category. We see video as the key application,” he said.

In addition, Pioneer laid out several obstacles that must be overcome to allow DVD burners to have their full impact on the category. At the top of the list is Pioneer’s contention that PC vendors are not doing enough to take advantage of this opportunity, and the ongoing format war, with four competing standards vying for the same market space, must be concluded, Parsons said.

All of the tier-one PC vendors offer rewritable DVD drives on their higher end models. Hewlett-Packard and it Compaq Presario brand along with Dell have settled on the DVD+R/RW standard while Apple, Sony and Gateway are in the -R/RW camp. However, Parsons said just offering the technology is not enough and does not solve the categories most formidable problem: customer confusion.

“PC vendors must do more than just put the drive in the PC, the solution needs to be more elegant than that,” he said, adding that developing a PC that is more akin to a DVD editing appliance than a traditional home computer might be a good first step.

Pioneer, the developer of the DVD-R/RW format, said its research, along with a study from IDC, Framingham, Mass., indicate that consumers are focused on using DVD burners for archiving home video, while the SoHo market is leaning toward data storage.

“What is needed to inspire people to buy DVD is a turnkey solution with an analog connection to allow consumers to utilize their VHS tapes,” Parsons said. He added that Apple is a good example of a PC maker putting this theory to practice by fully supporting the drive with a marketing campaign.

Apple CEO Steve Jobs said last month at the Macworld Expo in New York that half of all G4 desktop computers sold featured a DVD-R SuperDrive. Video editing is at the heart of Apple’s marketing scheme for its computers.

Gateway also saw a dramatic spike in sales when it rolled out DVD-RW-equipped desktops earlier this year. Keith Linden, Gateway’s marketing manager for desktops, said sales increased two fold on the company’s top-end $3,000 PC when DVD-RW drives became available. Some of this interest was due to the inclusion of an 18-inch flat panel in the package, but there is a great deal of consumer demand for DVD, he said. Gateway has since made DVD-RW available on $1,599 and $1,999 priced models, but Linden said not to expect rewritable DVD to be on a sub-$1,000 PC until the end of 2002 at the earliest.

“It will take awhile for this to happen because you need a powerful system to run DVD-RW drives and they won’t be at that price too soon,” Linden said.

Gateway feels that, like Apple, it has done quite a lot to push video editing as a primary PC application. The Gateway Country Stores’ merchandising is centered on this theme and the company includes video editing software in units with CD-RW drives so people can get a start even if they do not own a rewritable DVD drive, Linden said.

HP could not comment for this article because it is in the media blackout period that precedes the announcement of its quarterly financial statement. However, this year at PC Expo, company executives said the company is focusing on all aspects of imaging and its PCs.

An IDC survey of 1,000 homes, of which 20 percent had a DVD, found that 54 percent use recordable DVD for home video editing, 12.6 percent indicated an interest in storing commercial video and less than 2 percent would use DVD media for archival data storage.

The consumer interest in video has helped DVD burners sell at an increasingly quick pace since 2000 when about 1 million drives shipped to 2002 when just under 5 million will flow from factories. The availability of aftermarket drives, which started hitting retailers in large volumes just this year, will help drive DVD burner sales to the 30 million mark worldwide by 2005.

IDC did not indicate how the on-going format war would effect unit shipments, but the report did indicate that compatibility is the major challenge for the industry. Parsons concurred, saying sales associates are just as confused as customers, to the point where they are not selling the correct media.

With most of the media now capable of being read by competing drives, the main format issue revolves around DVD writing, said Parsons. No drive can handle media from another format, which is a huge blow to the industry and one only to be solved on store floors as consumers make their final choice.

Linden said DVD-RW media can be read by about 90 percent of the installed base of DVD players and drives. DVD+RW’s backward compatibility is somewhat less.