Harry the happy consumer! I wonder just how clear and just how pristine the pictures and sound will get? As Rome burns Harry watches.
Happy New Year, Brian > Keith, > > You will be interested in this - a (relatively) free market at work. > In an > LA Times story, a graph shows that in the last five years, DVD players > have > increased in sales from about 350,000 to 20,100,000. > > Their prices have dropped from $491 to $132. > > I can get one from a reputable manufacturer for as low as $49. > > Instead of cursing corporate darkness, perhaps we should light a free > market candle! > > Here is the story. > > Harry > > ---------------------------------------------------------------------- > ------ > > Los Angeles Times - latimes.com > > SUCCESS OF DVD PLAYERS PROVES A MIXED BLESSING > > By Jon Healey, Times Staff Writer > > No product has been as bittersweet for the consumer electronics > industry as > the DVD player. > > Drawn to the sharp pictures and cinematic sound, consumers have bought > up > DVD players faster than any other electronic device in history. Even > though > the players became widely available in the United States only 5 1/2 > years > ago, more than 46 million homes now have one attached to a TV or a > computer > monitor. > > But sales have skyrocketed in large part because prices have > plummeted. In > turn, so have manufacturers' profits. As no-name, no-frills brands > have > flooded stores, the Japanese and European electronics giants that > invented > DVD have watched their profit margins get squeezed in record time. > > Retailers' profits have mostly evaporated, too, as the average price > of a > DVD player has fallen from $491 in 1997 to an estimated $118 today, > according to NPD Intelect, a research firm. Entry-level units sell for > $59 > or less. > > "The joke is you're going to get a free DVD player with the purchase > of a > DVD [movie] pretty soon," said Noah Herschman, vice president for > video at > Tweeter Home Entertainment Group of Canton, Mass. > > "You can buy a DVD player that has a laser and all sorts of advanced > technology ... for less money than it costs to buy a necktie," he > added. > "It doesn't make any sense." > > Even worse for consumer electronics makers and retailers, the DVD > experience may be a harbinger of things to come. Competition at the > market's low end is intensifying for all sorts of digital gear, fueled > in > part by low-wage assembly plants sprouting up across China. > > Faced with this difficult situation, many manufacturers and merchants > hope > to widen their profit margins again by enticing consumers to buy > something > more than just a budget DVD player. > > "You survive by making new technologies," explained Andy Parsons, a > senior > vice president at Pioneer Electronics Inc. in Long Beach. > > One area with potential is DVD recorders. Mike Mohan, director of > audio-video merchandising for Good Guys Inc. of Alameda, predicts that > more > DVD recorders than players will be on the market within two years. And > he > expects them to sell for $200 to $300 per unit. > > Meanwhile, at the International Consumer Electronics Show this week in > Las > Vegas, an array of more expensive DVD machines will be on display. > Among > their features: > > * High definition: At least two companies -- Samsung Electronics Co. > and > Philips Electronics -- plan to introduce DVD players this year that > convert > standard DVD movies into simulated high-definition pictures when > viewed on > an HDTV set. > > Next year, the first DVD players capable of playing true > high-definition > discs are expected to arrive. But manufacturers have split into two > camps > that are backing incompatible high-definition formats, potentially > slowing > the emergence of the new generation of discs. > > * Hard-drive recording: Several manufacturers, including Toshiba Corp. > and > Apex Digital Inc., have or soon will offer DVD recorders with built-in > hard > drives for temporarily storing programs. And Thomson, which makes RCA > products, has two types of hard-drive-equipped DVD players in the > works: > one for recording TV, the other for storing music in a digital > jukebox. The > latter also will play radio stations from the Internet. > > * Home networking: Sonicblue Inc. plans to introduce a DVD player soon > that > can connect to a home network. The device lets consumers move digital > music > and movies from their computers or the Internet to their stereos and > TV sets. > > Herschman of Tweeter Home Entertainment, a retailer that caters to a > high-end clientele, said gadget lovers and videophiles are willing to > pay a > premium for DVD players that offer extra features or boast superior > picture > quality. > > So far, however, most consumers have resisted paying more for such > enhancements. And low-cost manufacturers already are setting their > sights > on DVD recorders, threatening to slash prices and profit margins in > that > arena as well. > > Fierce competition has long been a hallmark of the consumer > electronics > market. Prices have dropped over time in virtually every product > category. > According to some industry executives, though, DVD players have taken > that > trend to an extreme, with prices falling faster and further than ever > before. > > In many cases, DVD technology has been reduced to an add-on in other > products, such as TV sets and digital video recorders. "Probably > quicker > than we wanted to, we've been pushed into making DVD a feature of > other > things," said David H. Arland, director of government and public > relations > for Thomson. > > It wasn't supposed to be like this. > > Sony Corp., Pioneer and Thomson were three of the nine consumer > electronics > companies that developed the DVD format in 1995 with Time Warner. > Sales of > TV-oriented DVD players took off, hitting 1 million in the first year > of > widespread availability. > > "It was the savior of the industry," said Claude Frank, director of > audio-video product marketing for Samsung Electronics America Inc. > "Everyone was touting how great it was, that it would bring > profitability > back." > > Instead, the high-priced players lured new manufacturers into the > fray, > many of them setting slim profit margins for the sake of high volume. > These > companies typically bought components from independent suppliers and > even > their competitors. > > And with so much of a DVD player based on industry standards, the > upstarts > could build models that were hard to differentiate from the > established > firms' basic offerings, said Sharon Taylor, a video product manager > for > Santa Clara, Calif.-based Sonicblue. > > Take, for instance, Apex Digital of Ontario. Using low-cost Chinese > factories and lean operations, it was able to grab chunks of the DVD > market > with players priced far below those of its bigger rivals. > > Yet Apex hasn't been solely a cheap provider. Its devices also caught > the > attention of music-loving gadget freaks by playing homemade CDs with > tunes > downloaded from the Internet. As a result, noted Apex spokesman Colton > Manley, electronics chain Circuit City Stores couldn't keep the Apex > players on the shelves. > > The company's low-margin, high-volume strategy has worked: Since > November > 2001, Apex has sold more DVD players than any other firm, Manley said. > > Many retailers have tried to use the Apex players and other low-price > entries as "loss leaders" -- a way to draw people into stores, in the > hopes > of selling them either a more expensive DVD player or a bunch of DVD > movies. The movies have sold well, but the souped-up DVD players > haven't. > > Frank, the Samsung executive, said he recently discussed the situation > with > a regional consumer electronics dealer known for selling higher-end > gear. > > "The gentleman referred to the product as 'a sewer of a category.' > That's > how it's progressed in five years -- from a savior of the industry to > a > sewer of a category." > > > ****************************** > Harry Pollard > Henry George School of LA > Box 655 > Tujunga CA 91042 > [EMAIL PROTECTED] > Tel: (818) 352-4141 > Fax: (818) 353-2242 > ******************************* > > > > --- > Outgoing mail is certified Virus Free. > Checked by AVG anti-virus system (http://www.grisoft.com). > Version: 6.0.434 / Virus Database: 243 - Release Date: 12/25/2002 > _______________________________________________ Futurework mailing list [EMAIL PROTECTED] http://scribe.uwaterloo.ca/mailman/listinfo/futurework
