January 29, 2004 3:13 PM PST

Report: China's next-generation DVD faces hurdles

China has developed an advanced DVD standard, but the format faces obstacles such as competition from rival technologies, according to a new report from market research firm iSuppli.

Several Chinese companies are making products based on so-called Enhanced Versatile Disc (EVD) technology, a format developed in China, iSuppli analyst Daniel Yang said in a report released Thursday. These products include 100,000 EVD players made early this year by Chinese company Jiangsu Shinco Electronic Group, Yang said.

He cautioned that the emerging EVD industry confronts serious challenges, including competition from the Blu-ray and HD-DVD disc formats designed to succeed today's DVD technology. Blu-ray is backed by Sony, Philips Electronics and other companies, while Toshiba and NEC are behind HD-DVD.

"It is still not clear if the EVD market can grow, as expected," Yang said.

The China-developed EVD standard is among several projects the government supports in its drive to reduce license fee payments and "shake off dependence on foreign technologies in production," according to the official Xinhua News Agency.

The efforts with EVD echo China's moves with respect to advanced cell phones and wireless data communication. For example, the country recently announced a new policy that requires all companies that import and sell Wi-Fi equipment to use an encryption standard, called Wired Authentication and Privacy Infrastructure, which China developed and is not used anywhere else.

China aims to reduce payments of patent royalties with the EVD standard, Yang said. In the case of DVD players, Chinese manufacturers pay "substantial fees" to the international owners of the main intellectual property patents, Yang said.

Yang said nine Chinese electronics manufacturers formed an EVD industry alliance last year to develop and promote EVD players. EVD decoder products have been made by Beijing Homaa Microelectronics Technology and Beijing E-world Technology, in cooperation with United States-based LSI Logic, Yang said.

In addition to facing competition from other advanced DVD formats, EVD technology "lacks a substantial library of software, i.e. films," Yang said.

Another potential problem is how well EVD products will work with the emerging technology of high-definition televisions, Yang said. "If the EVD players are not compatible with HD-TVs, their advantage in HD formats will be wasted," he said.

CNET Asia staff contributed to this report.

 

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