CD-ROM Drive Prices Drop

Strong competition and new technology should force already low prices for CD-ROM readers to drop even further this fall. The demand for CD-ROM drives is high, but manufacturers are finding many competitors in the retail channel. At the same time, computer vendors, who are also facing strong competition, are pressuring drive vendors (CD-ROM and magnetic) to lower their prices. ``The market is cutthroat and aggressive,'' says John Antonchick, director of marketing at Mitsumi (Irving, TX), noting that the company's Double Speed Drive kit, which has an interface card, a cable, and software, sells for as little as $120.

New PCs that support the enhanced IDE interface on the motherboard should drive CD-ROM drive prices even lower. The direct connection eliminates the need for a CD-ROM interface card, further reducing cost. Patty Chang, principal analyst at market-research firm Dataquest (San Jose, CA), notes that an increase in demand for CD-ROM software in the home market, improved software, and falling prices of both CD-ROM drives and PCs will continue to pace demand for CD-ROM readers. She also says that in the second half of 1995, prices for quad-speed drives could be in the same range as current double-speed drive prices.

For now, drive vendors feel the high demand for CD-ROM readers will help offset the low profit margins endemic to the double-speed category. In fact, NEC (Wood Dale, IL), known for its top-of-the-line MultiSpin 4X Pro that lists for $1120, recently reentered the double-speed market with its MultiSpin 2V for value-conscious consumers.

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Illustration: Graph: Mainstream CD-ROM Worldwide penetration of CD-ROM drives on desktop PC's (in million)