•News Center
 •This Week
 •From US
 •Register Now
 •About Us
 •Advertising Info
 •Nikkei BP Group

Advanced Search

(Japanese Site)

  • Taiwan DVD Makers See Losses Following Price Cuts
  • April 1, 1998 (TAIPEI) -- Some Taiwan DVD player makers are losing money after cutting prices to compete in the market.
    The makers have been working hard to catch up with foreign heavyweights in the manufacturing of second-generation products. In an effort to boost sales, some have even been setting prices lower than their production costs.

    While DVD players debuted in world markets in 1996, the local market did not begin to form until early 1997.

    Prices of products from Matsushita Electric Co., Ltd. have served as an indicator to other competitors.

    Since both Matsushita and Pioneer Electronic Corp. have recently introduced to the market models that sell for about NT$23,000 (US$701), other companies are expected to follow suit and reduce the prices of their products.

    For example, Acer Sertek Inc. decided to sell a new DVD player model that will debut in early April at a price of NT$22,900. Esonic Corp., which plans to begin offering DVD-ROM players in June, is likely to follow suit.

    However, DVD player makers here said that as costs of key components and technology royalties vary from manufacturer to manufacturer, some local companies are actually selling products at prices that cannot cover production costs.

    Currently, prices of key components for DVD players are still in chaos.

    Hardware production costs may thus account for anywhere from 50 to 70 percent of a manufacturer's overall production costs, while royalties may account for anywhere from 7 percent to 10 percent.

    As a result of these great differences in key component prices and royalties, there are also great gaps in overall production costs among various companies.

    But since vendors are hesitant to set prices higher than its rivals, some companies have been forced to cut prices and accept low profit margins, or even losses, in order to follow market trends.

    Related story: DVD Player Sales in Taiwan Won't Increase Soon

    OR: (Commercial Times, Taiwan

    Copyright © 1997-98
    Nikkei BP BizTech, Inc.
    All Rights Reserved.
    Updated: Tue Mar 31 20:44:30 1998