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Philips sees rosy future for DVD recorder sales

Senior officials at Philips Semiconductor, Europe's third largest chipmaker, said yesterday that the outlook for DVD recorder sales next year is rosy.

"We see a great role for the DVD recorder in the home," Indro Mukerjee, an executive vice president at Philips Semiconductors, told reporters in Taipei yesterday. "We see DVD [recorders] becoming more pervasive as the price comes down and more and more recorders go into the home."

Global research company International Data Corp (IDC) predicts that the annual shipments of DVD recorders will grow to more than 50 million units in 2006.

"DVD recorders are set to ramp up even faster than players," IDC's report says.

Another research firm is more optimistic. Semico Research Corp predicted in the summer that more than 3.5 million DVD recorders, worth US$1.48 billion, will ship this year, rising to 47.9 million units, worth US$8.33 billion, in 2007.

"Our bullish outlook is based on the simple premise that DVD recorders will eventually replace VCRs in most homes," Adrienne Downey, an analyst at Semico, said in the report.

"Recording to DVDs means that content will last longer, whereas content on VHS tapes begins to degrade much faster. DVD recording also means that finding content will be easier due to the ability to program menus on DVDs," Downey said.

Wireless technologies that allow consumers to use viewing screens and devices anywhere in the house are making this happen, Mukerjee said.

Taiwanese companies are poised to grab a large slice of the market.

"Taiwan is leading the market in terms of the convergence of computers, consumer electronics and wireless communications," Mukerjee said. "We see a kind of electronics Silk Route developing between East and West. Taiwan is at the crossroads of that route."

Another driving factor for the increase in digital recorder sales is the growth of digital TV, Mukerjee said, citing the US Federal Communications Commission's stipulation that all TVs larger than 36 inches (91cm) must be able to decode digital signals from next year. The US, Europe, Japan, China and Taiwan have set deadlines for the complete switch to digital television from 2006 to 2010.

"Taiwan has traditionally been a very heavy cable market," Mukerjee said. "We're optimistic a lot of brainpower will move over to digital TV. We're optimistic that Taiwan will take a leading role as it did in e-government."

His colleague agreed.

"There is a groundswell in place," said Rob Fletcher, general manager for marketing and sales in the Asia Pacific region. "The momentum to switch to digital is there."

Philips Semiconductor, which has been struggling to turn a profit this year, has said account books will see black ink this quarter.

"We definitely see improvement," Mukerjee said. "Our order book is increasing, prices are firming and customers are talking in terms of months and quarters instead of the weeks and days they had been talking of until recently."

A return of consumer confidence in the US is making Philips and other tech firms more confident, he added.
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