Chinese firms seek to replace DVDs with home-grown technology

[Cthippo]

Originally Posted by AFP

BEIJING - Leading Chinese makers are to stop making DVD players from 2008 as part of China's plan to replace foreign technology with a new home-grown standard, an industry alliance chief said.

"Nineteen out of our 21 member manufacturers will be producing EVD players with compatible function only by 2008," Zhang Baoquan, the secretary-general of the EVD (Enhanced Versatile Disc) Industry Alliance told AFP.

In the past, only one major DVD producer was making EVD players and only around 700,000 units were sold last year, Zhang said.

This accounts for less than one thirtieth of the annual sales of DVD players according to iSuppli Corp, a market research company specializing in the electronic manufacturing industry.

Apart from the media industry, China has been pushing its own standards in many other product categories such as third-generation mobile phones, wireless local area networks, digital TV, and home networking.

"It is a general trend for China to develop its own industry standards, as it could implicitly help Chinese enterprises improve their competitiveness in the domestic market," said Ma Jun, Deutsche Bank's chief China economist.

"Foreign companies in China will have to either buy patents or pay royalties to Chinese companies or form joint ventures with local intellectual property right holders," he said.

The 19 Chinese manufacturers' decision to join the push for the EVD will be officially announced next Wednesday, Zhang said.

"They had to do it because of the shrinking profitability of DVD players made in China," he said.

"There is almost no profit for Chinese DVD makers as they have to pay about seven dollars in licensing fees to foreign patent holders per DVD player, which are sold at around 20 dollars only -- both at home and abroad."

The average selling price of EVD players will be set at 700 yuan (89 dollars), according to Zhang. He said the higher price is meant to reflect better quality than the DVD players.

Members of the alliance consists of not only disc-player manufacturers but also publishers and distributors which include TCL, China's biggest TV maker, and Gome, the country's largest home appliance chain.

Gome will open 150 special areas in its outlets around the country to sell EVD players, Zhang said.

According to a report by the official China Daily, the alliance will have another 800 franchised outlets selling EVD discs and expects the number of franchised outlets to rise to 1,200 by the end of this year.

The Chinese government has been bolstering the development of EVD in a bid to reduce the country's reliance on foreign technology since 1999.

Well, I guess that's one way to do somthing about pirated DVDs

[trailblazer]

As the article states, it's not just the media industry, but other product categories like mobile phones and digital tv's, with such a huge domestic market and the hi-tech industry now to service that demand, who can blame them. That would be interesting, as, in the future China could be deciding all the new "standards" for consumer electronics. The example given of a DVD player costing 20 dollars with 7 dollars of that going to foreign patent holders, its not surprising they are looking to patent their own "standards"!

[Colonel Sanders]

Em, that just seems crazy. I don't believe their will be a market for EVD inside or outside of China for two reasons- DVD is popular and HD-DVD and Blu-Ray have already occupied the market for next gen. technology. Really the only problem I see is that manufacturers let their prices get cut so low that they cant make a profit- it is pathetic that they allowed that to happen. I don't believe forcing a new technology onto consumers is the right solution to this problem.

L J

[Cthippo]

Originally Posted by Colonel Sanders

Really the only problem I see is that manufacturers let their prices get cut so low that they cant make a profit- it is pathetic that they allowed that to happen. I don't believe forcing a new technology onto consumers is the right solution to this problem.

L J

And how do you propose to do that? If it costs you X to make a DVD player and you sell it for Y, there is always someone ut there who can sell it for 10 bucks less. If not that, you have retailers like Walmart demanding that you cut your prices or else they will buy from your competitor. Manufacturers are being left with a choice between proce-fixing which is illegal, or giving up on any hope of making a profit.

Honestly, I can't say I feel too bad about that.

[Bindibadgi]

Originally Posted by Colonel Sanders

Em, that just seems crazy. I don't believe their will be a market for EVD inside or outside of China for two reasons- DVD is popular and HD-DVD and Blu-Ray have already occupied the market for next gen. technology. Really the only problem I see is that manufacturers let their prices get cut so low that they cant make a profit- it is pathetic that they allowed that to happen. I don't believe forcing a new technology onto consumers is the right solution to this problem.

L J

Nope. Only a fraction of the Chinese can afford HDTVs and most will buy "DVDs" because they are easily pirated and cheap to buy, plus, you can't really tell the difference between pirated material and legal. So by making their own format as close to DVD as possible they can retail the units for less and sell more, plus, keep more profits within China. It's a win-win situation for them.

They are going it alone on the GPS system and already went their own way on a whole new Blackberry "Redberry" equivilent chinese system so they wouldn't have to pay royalties to other countries. Very clever management imo and the advantage of a communit state is they GET STUFF DONE because they can throw money at people who will work literally 24/7, despite the level of beurocracy.

[Colonel Sanders]

Originally Posted by Cthippo

And how do you propose to do that? If it costs you X to make a DVD player and you sell it for Y, there is always someone ut there who can sell it for 10 bucks less. If not that, you have retailers like Walmart demanding that you cut your prices or else they will buy from your competitor. Manufacturers are being left with a choice between proce-fixing which is illegal, or giving up on any hope of making a profit.

Honestly, I can't say I feel too bad about that.

How is there always someone out there who can sell it for $10 less if everyone is complaining about loosing money? Is introducing proprietary tech really the proper way to deal with competition?

L J

[trailblazer]

I think part of what they are saying is that they can produce quality goods at a competeitive cost but they are paying a high price (relative to the cost of production) for foreign patents. They don't like it and are looking at home grown patents.

[J-Pepper]

Think of it more as a move towards innovation rather than acting as the low-cost manufacturing solution to the world.

Competition with 'outside' standards can only be positive for internal market since market forces can not be changed. If EVD is no good, then consumers will vote with their wallets and not buy but that doesn't mean they call EVD a failure and go home, it just means they have to improve.

I think it's actually quite a clever method to keep sustained growth in the country.

[cpemma]

This could be AMD competing with Intel on processors; design something compatible without infringing an existing patent. Or Japan, starting out with crude copies of Western stuff, getting experience, and then beating the West to a pulp with mass-produced cars and electronics. Interesting times...

[DarkReaper]

Originally Posted by Colonel Sanders

How is there always someone out there who can sell it for $10 less if everyone is complaining about loosing money?

Maybe $10 was a bad example, but there'll be someone who will do each unit for $1 cheaper - sure it makes them less profit but they get the deal. Then someone else says $2, then $2.50, and each cut eats into profit until it's almost now worth making the things. but because it's still just a bit more profitable to make them than now, they make them.

Now if you could get rid of the 7 dollar licensing fee then that will give you a massive amount of extra cash to play with, so you can drop prices a touch and still make more money. So customers are happy and the company is happy.

[mikeuk2004]

Originally Posted by Colonel Sanders

Em, that just seems crazy. I don't believe their will be a market for EVD inside or outside of China for two reasons- DVD is popular and HD-DVD and Blu-Ray have already occupied the market for next gen.

First off the only chinese that can afford Blue Ray and Hd DVD are the really rich. Second, when a 3rd of the worlds population is China and they create a new standard does it matter if it doesnt get taken up outside of china.

My father in law in China has a HD TV but he would not be able to aford a HD DVD or Blueray on his wage of £300 a month or $600 a month.

[Colonel Sanders]

Mike - your example is kinda flawed, China may have a 3rd of the population but they certainly don't have a 3rd of the market so the odds of creating a new standard are low.

L J

[trailblazer]

This is one of those long term plans that the chinese are good at. The economy is advancing very rapidly, so give them a few years and they will have a bigger slice of the market.

[mikeuk2004]

VCD is still big in china and prefered and used by the majority than DVD

[J-Pepper]

Originally Posted by engadget

Chinese engineers have been working on homegrown disc format EVD since 2003 with little to show for it, but today 20 firms -- representing 97 percent of the DVD manufacturers in the country -- displayed 80 players and announced plans to switch from DVD to the new format exclusively by 2008. EVD joins VMD as a low cost alternative to Blu-ray and HD DVD, using conventional red lasers combined with advanced compression technology to put high definition movies on discs. This "Red-ray" HD approach promises to support resolutions up to 1080p without a need to increase disc capacity significantly, and will allow them to launch with players at the same price as current DVD -only models. EVD is just one of several recent Chinese initiatives to decrease reliance on outside standards and licenses, but is doubtful to catch on elsewhere. That's really too bad, because with players priced at only $87, we're interested in the group's ideas and would like to subscribe to their newsletter. Additionally, the format's backers plan to sell movies at download-and-burn kiosks and allow users to rip movies to their hard drive -- no hacking necessary.

[13000]

More tech is good tech.

[FredsFriend]

Originally Posted by Colonel Sanders

Em, that just seems crazy. I don't believe their will be a market for EVD inside or outside of China for two reasons- DVD is popular and HD-DVD and Blu-Ray have already occupied the market for next gen. technology.

Surely any new tech that is better than the old is a good thing, it's cheaper than and of comparable capacity than HD-DVD.
The only issue that i can see is that the US movie studios won't accept the standard because the backers behind HD-DVD/Blue ray will put pressure on the studios because they feel pressured.

Originally Posted by Colonel Sanders

Really the only problem I see is that manufacturers let their prices get cut so low that they cant make a profit- it is pathetic that they allowed that to happen. I don't believe forcing a new technology onto consumers is the right solution to this problem.L J

What like HD-DVD/Blue ray?

[Colonel Sanders]

Fred EVD is different than HD-DVD and BluRay because HD-DVD and BluRay were designed primarily for the purpose of introducing high definition- they offer a good improvement over DVDs. EVD on the other hand appears to be nothing more than "We cant afford royalties so lets make our own standard!" Grand idea, make proprietary technology the solution to everything. We might as well just ditch the ATAPI standard so Creative, Sony, and others can charge us even more for CD-ROMs, it's the Chinese way!

L J

[mikeuk2004]

Originally Posted by Colonel Sanders

EVD on the other hand appears to be nothing more than "We cant afford royalties so lets make our own standard!" Grand idea, make proprietary technology the solution to everything

L J

I think your missing the point. The tech prob won’t be released out of china. Its so China can sell its own tech in china for its people and not pay other countries for the privilege.

As a DVD player is common place now in UK and USA it aint in China. With top wages lower than minimum wage here its a right move for china to develop its own tech and can sell lower to its people than paying the likes of USA for its technology and force China to sell DVD at a higher price. Come on, a lot of china is still like a third world country, let them enjoy the benefits of life like you and me without the extortionate price.

China wants to 'not rely' on other countries for anything and everything.

I think the UK should do it too. We spend more money on imported tech and dont create enough of our own.

[Colonel Sanders]

I pay for imported tech, I see no reason why China should be different. When DVD players were first released and I could not afford a DVD player I simply continued watching VHS tapes.

MikeUK- if you look around these forums, EVD is getting a new flavor which will compete with BluRay and HD-DVD. Apparently, the new EVD will use cheaper red-lasers and a ton of layers to achieve nearly the same size as HD-DVD or BluRay. Personally, I think it's a pretty bad idea- I mean whats to stop HD-DVD and BluRay from getting just as many layers?

L J