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Tuesday, August 10, 2004
Major financial downbeat on DVD players

Commoditization is hitting China's DVD player manufacturers hard, according to researcher iSuppli. Between January and May, the average selling price of a DVD player exported out of the Guangdong province came to $40.80, leaving just about $1 in profit margins for the manufacturers.

The province accounts for 84.2 percent of China's exports of DVD players and exported 34.5 million of the players during the January to May period.

Thirty Chinese DVD player makers declared bankruptcy in the first half of the year, analyst Byron Wu wrote in a report.

Technology products typically endure steep price declines as popularity grows because of the pervasiveness of standardization. The declines in DVD player prices, however, have been particularly severe, analysts have noted. Despite the difficulty of the market, it has paved the way for the emergence of companies such as Apex.

DVD players have also served as a vehicle for Chinese manufacturers, which traditionally serve as contract manufacturers, to sell products under their own brand names in Europe and North America.

Some manufacturers, including Jiangsu Shinco Electronic Group, have diversified into slightly higher-margin categories, such as portable DVD players.

Despite the difficulty in eking out a profit, the popularity of players remains unabated. Shipments in 2004 should increase to 110 million units, according to Wu, up from 90 million in 2003.

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