Maxell sees blank CD-R price increase!

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Wednesday, May 16, 2001

Maxell sees blank CD-R price increase!

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"...Maxell Corporation of America has said that it has been receiving price increases from Taiwanese manufacturers on CD-R blank media of about 30% and is expecting further increases in coming months. According to Don Patrican, executive vice president of Maxell, the increases have come as a result of higher manufacturing and material costs and more vigorous enforcement of royalty agreements.

"CD-R price erosion has been the steepest downhill roller-coaster ride in the history of blank media. However, we believe higher prices for the format won't effect end-user consumption. Demand continues to be exceptionally robust for this format. The reasons prices had skidded so precipitously are global oversupply and the lack of a finalized and fully enforceable royalty program. Market perception of the price/value relationship of this format supports higher prices. And CD-R price stabilization positively influences the ability of retailers to anniversary dollar sales in this category. I see no evidence that bringing media prices into line with reality is hurting demand. Also, the reduction in the number of suppliers in the category through manufacturer consolidation means retailers can offer stronger branded solutions to end users" Patrican added.

Patrican also cites robust sales increases of CD-R and CD-RW drives worldwide of 60% as strong evidence of the health of the format and its ability to sustain high sales levels of CD-R blank media at increased prices..."