Falling DVD recorder prices takes toll on manufacturing

February 2, 2005

At one
time the DVD recorder was a big moneymaker for recorder manufacturers. But
steadily falling prices have creaed margins so slim that many are beginning to
see profits falling at an incredible rate. They are beginning to look upon our
beloved DVD burners as a burden, and things will get worse as the popularity of
these devices just keeps growing!

The makers are in a cheerless predicament: They are unable to continue
lowering prices because their thinning profit margins can't absorb it, and
they can't realistically hope to benefit from raising prices in a market
saturated with lower-priced goods.

And there is no respite in sight because the popularity of DVD
recorders is expected to grow as they become more powerful and easier to
use.

Sony Corp. announced in January that it was lowering its operating
profit forecast for the year ending March by 50 billion yen to 110 billion
yen. The bleak prediction is due to falling prices of DVD recorders and
flat-panel TVs.

``The (DVD recorder) price fall during the year-end shopping season was
of historic proportions,'' says Sony Executive Deputy President Katsumi
Ihara.

A latecomer to the market, the company has led a price-cutting
competition to catch up with rivals.

Its Sugoroku line of products, featuring a noise-reduction function,
sold well at the year-end, but steep price falls nullified any sales
gains. Prices of DVD recorders in December were 40 percent less than what
they were a year earlier, according to Sony.

What is it about the electronics industry that is
different from other manufacturing? We sure as heck don't see automobiles or
groceries dropping to the point of no profit! But, it seems that the computer
industry is a different model that continues to offer more power, speed and
features while the prices plummet. You can read the whole story here.

Source: asahi