January 5, 2001 11:15 AM PST

Apple, Compaq adding recordable DVD drives

Will Joe and Jane consumer put Steven Spielberg out of work?

Could be, if Apple Computer and Compaq Computer have their way. Both companies are scrambling to offer the ultimate in amateur moviemaking: the capability to record movies onto DVDs via a computer.

Besides movies, the drives also can be used to make audio DVDs. Warner Music released the first DVD audio titles in October, setting the stage for a shift from music CDs to DVDs, which can be spruced up with music videos, games and links to online interactive content.

Apple is expected to unveil new Power Macs next week capable of recording DVDs and CDs, according to sources who warn that these plans could change at the last minute. Compaq this week announced a new Presario consumer PC with a combo DVD/CD recordable/rewritable drive. That system ships in March.

Using computers to make and edit movies is nothing new--whether in the home or in a professional setting. Sales of consumer digital camcorders, for example, which shoot movies that can be quickly transferred to a PC for editing, swelled to $3.3 billion last year, or 5.7 million units, according to the Consumer Electronics Association (CEA).

DVD is seen as the future for movie watching and making because of the format's crisp digital playback and its growing popularity. The CEA describes DVD players as the fastest-selling consumer-electronics device ever.

On Friday, the trade association projected $2.4 billion in DVD player sales for 2000, or 12.5 million units sold.

But consumers have had limited options for storing and playing back their movies. The ability to record DVDs at home and then send them to grandma to watch in her DVD player is compelling, say analysts.

In fact, PC Data analyst Stephen Baker described DVD recording as an essential technology for reinvigorating computer sales at retail, which in 2000 declined for the first time.

"This is the kind of stuff that is going to rekindle demand in the future," he said. "DVD recording absolutely would be a compelling reason to buy a new PC."

Both Apple and Compaq have good reason to try to spur PC demand. The drop in PC sales hit the consumer market first, and affected Apple and Compaq more seriously than some other computer makers. Both companies watched inventory on dealers' shelves swell, as retail revenue plummeted 30 percent in December compared with last year, according to PC Data.

Apple's crop
For Apple, DVD recording is a natural fit, particularly since the company already offers movie-editing software on all Macs. Apple's iMovie 2 lets consumers transfer content from a digital camcorder for editing on Macs and transferring to other media, such as a CD or a VHS tape.

For some time Apple has also offered DVD-RAM, one of several competing DVD recording formats, as an option on Power Macs. But DVD-RAM is more suitable for data storage than for recording home movies, and the discs cannot be played in DVD players, said Dataquest analyst Mary Craig.

"There are just too many compatibility issues with DVD-RAM," she said.

Late last year, Apple started evaluating DVD-R (DVD recordable) drives from Pioneer, which the company plans to ship to computer makers sometime in February. Pioneer acknowledged Apple had been evaluating the drives, but would not comment on any product plans.

However, sources familiar with the matter said Apple is likely to unveil a Pioneer DVD-R/CD-RW (CD rewritable) drive as an option on new Power Macs during next week's Macworld Expo trade show in San Francisco. The company also is expected to offer DVD/CD-RW drives on some Macs.

The DVD-R drives are expected to appear first as a build-to-order option as early as late February.

Apple, as part of its policy, would not comment on its product plans.

Craig said the reasons for favoring DVD-R over DVD-RAM are obvious, particularly because of DVD-R's wide compatibility with DVD drives and DVD players. "If what we're hearing is true, you should be able to play the (recorded discs) in many players."

Apple's DVD authoring software plans are uncertain. But at Macworld, Roxio--the software spinoff from Adaptec--will release a new version of its Toast CD authoring software capable of recording to DVD-RAM and DVD-R/RW discs, said sources close to the company.

Presario pleases
Compaq's plans are more definite than Apple's, and perhaps more developed. On Wednesday, the Houston-based company introduced the MyMovieStudio Presario 7000 PC, equipped with IEEE 1394, or FireWire, ports and software for editing movies.

In March, the company will begin offering Pioneer DVD-R drives on its Presario 7000 PCs, said Mark Vena, Compaq's director of consumer desktop marketing. Compaq expects to start accepting orders in about 30 days, he added.

The PC maker is betting that pent up demand for making home movies on DVDs will help drive DVD-R sales.

"The chief reason we're excited about DVD-R, DVD-RW technology is that it allows people to put out portable movies and play (them) on a DVD player," he said.

Besides those interested in digital movies, Vena sees a lot of potential "for people who are just looking for large mass storage."

Compatibility and the cost of DVD-R discs also influenced Compaq to adopt DVD-R.

"The good thing about this drive is it's perhaps the most flexible of all the formats," Vena said. "It will be a DVD-R drive--meaning you can record movies to recordable DVD discs, which are about 10 bucks--but going forward that drive will be DVD-RW compatible with a software update."

Compaq will provide software with the drives that will allow consumers to add menu and chapter options to their DVD-R discs similar to those found on professional DVD movies.

Coincidently, Ulead next week will unveil a new version of its VideoStudio software with similar DVD authoring capabilities, the company said.

Cost a problem?
DVD-R is not the only DVD recordable format out there, and the major competitors--DVD-RAM and DVD+RW--have major backers, such as Panasonic and Hewlett-Packard. But DVD-R is the first widely compatible format to market, with DVD+RW not expected before the second half of 2001.

But the cost of the drives could create problems getting it to market. Andy Parsons, Pioneer's vice president of product development, would not comment on what PC makers will pay for the drives, but Vena put it at a few hundred dollars.

Standalone drives sold at retail will carry a suggested price of $995, Parsons said, which some dealers could choose to discount.

"That's too much. That's the wrong answer," said Craig, questioning whether drive costs will push up computer price tags too high for the majority of consumers.

Craig said the margins on the drives and media, or discs, are enormous. "You can make the DVD-RW media for about the same price as the CD-RW media. It's dirt cheap. It's the whole chicken and egg thing. They need the volume, they want the volume, but they don't want to crash the price too soon."

Parsons said DVD-R discs would sell in the $10 to $15 range and DVD-RW in the $20 to $25 range. But he expects that price to drop quickly.

Pioneer initially will ship the drives with DVD recording capability but not rerecording. After a February meeting of the industry body known as the DVD Forum, which will finalize DVD-RW standards issues, Pioneer plans to release a software update enabling DVD rerecording.

"We're just trying to follow the rules, be good guys and not jump the gun and say we're going to do that before we have the final OK from the forum," Parsons explained.

Ultimately, DVD recording is here to stay, said Craig, who expects the technology will find its footing this year. In 2001, market researcher Dataquest expects manufacturers will ship 1.8 million DVD recordable drives--for all formats--up from 585,000 units last year. Dataquest predicts the number will reach 13.8 million units by 2004. For comparison, Dataquest forecasts that 40 million to 50 million CD-RW drives will be shipped this year.

To really take off, retail drive prices must drop, PC Data's Baker said. "To reach the mass market, the drive prices have to come down, and $399 is probably where you want to be."

 

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