Is DVD Ready for Business?

Posted on December 01, 1997

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Is DVD Ready for Business?

DVD is poised to eclipse CD, but to gain acceptance in the corporate market, DVD still has a number of hurdles to clear.

Ralph LaBarge

NB Digital Solutions

DVD is one of the most talked about new technologies of the 90s. While consumer DVD products have been successfully introduced in the home-entertainment market, few DVD products are available for the corporate environment--a situation that is beginning to change. Over the last couple months, a wide variety of DVD-ROM-enabled desktop and portable computers have been launched. Once the hardware is readily available, business applications software will emerge. Then, corporate users will see DVD as a solution to real-world problems.

DVD discs hold substantially more data than CD-ROM discs for several reasons. The use of smaller "pits" and closer-spaced tracks increases a DVD disc`s total storage capacity by more than 700%, compared to a traditional CD-ROM disc. Data can also be stored on both sides of a DVD disc and is stored on two distinct recording layers on each side of the disc. A DVD disc will hold up to 17GB of data, which is more than 26 times more capacity than a CD-ROM disc.

The specifications for DVD include five different formats, each addressing a unique consumer or business requirement. DVD-Video and DVD-Audio, for example, are low-cost, high-quality media for the home-entertainment market. On the other hand, DVD-ROM (read-only), which is both a consumer and business format, is designed to replace CD-ROM; DVD-R (write-once) and DVD-RAM (read/write) are primarily business formats designed for high-capacity recordable storage.

Since DVD`s introduction in March, a feeding frenzy of discussion about the consumer DVD-Video format has diverted attention from the DVD formats that will be most beneficial to business: DVD-ROM, DVD-R, and DVD-RAM. Most business users do not understand that DVD is more than a home-entertainment device to deliver high-quality, full-length feature films for home viewing. It is interesting to note, however, that all of the market projections published to date forecast business DVD formats to significantly outsell consumer formats over the next several years. In fact, both Intel and Microsoft recently published market forecasts that show DVD-ROM products outpacing DVD-Video by a factor of 10 by the end of 1998.

CD-ROM and CD-R have become very popular among corporate users. Almost all new business computers come with a built-in CD-ROM drive, and many include a CD-R drive, which allows users to store data on low-cost optical discs. In today`s business world, the CD has become almost as ubiquitous as the floppy diskette for storing and transferring data.

DVD Has Hurdles to Clear

For DVD-ROM technology to replace CD-ROM and CD-R in the corporate environment, it must first clear a number of hurdles.

Hurdle #1: New Capabilities. To succeed in the corporate world, DVD must offer a set of new capabilities not provided by current CD-ROM or CD-R technology. DVD has already cleared this hurdle; both DVD-ROM and DVD-R offer a significant increase in storage capacity over CD-ROM and CD-R products. In fact, for some business applications--such as the publication of very large data bases--DVD is the only practical solution available.

Hurdle #2: Better Price/Performance. CD-ROM is a common component in all new computers because CD-ROM drives and discs are inexpensive to manufacture. Currently, DVD drives are slightly more expensive than CD-ROM drives with comparable performance (12X to 20X), but the price gap should close within the next three to six months. It`s also important to note that second-generation DVD-ROM drives, which are just coming to market, read all CD-ROM and CD-R discs.

As for DVD discs, at the moment they are more expensive to manufacture than CD-ROM discs, but the price gap between DVD and CD is also small and closing fast. For example, it costs about $4,000 to manufacture 1,000 copies of a seven-disc CD-ROM application, which compares to about $5,000 for the same application on DVD discs. DVD should offer better price/performance than CD in the first quarter of 1998.

Hurdle #3: Compatibility. Business users expect their computers to correctly execute applications stored on CD-ROM and CD-R media. While some cross- platform issues (e.g., PC vs. Mac) have not been totally resolved in the CD-ROM market, most CD applications work on almost all CD-ROM-enabled computers.

Recently, Intel and the Software Publishers Association (SPA) held a DVD-ROM Compatibility and Test Event whose purpose was to provide a forum for testing DVD titles and systems under development. Of the 80 titles tested on 25 DVD-ROM-equipped computer systems, more than 66% failed to work properly on at least one and in most cases several of the DVD-ROM-enabled PCs. (However, it is important to note that all of the titles tested were still under development and that all of the DVD-ROM systems were either beta or pre-production systems). As a result, the SPA established a Technical Working Group to address compatibility issues and to recommend ways of eliminating these problems before DVD-ROM titles and systems are brought to market.

Compatibility problems with DVD-ROM titles and systems today are very similar to those experienced in the early days of CD-ROM.

DVD will probably hit its price/performance stride in the second half of 1998. By then, the various industry groups should have solved most of the compatibility problems, and most DVD-ROM vendors will be releasing second- and third-generation products incorporating the groups` recommendations.

Hurdle #4: A "Must-Have" Solution. CD-ROM has become so popular in the business world that it is difficult to find applications in any other format. For DVD, in turn, to become a mainstream business tool, application developers such as Microsoft must start publishing their products in the DVD format. But as with any new computer format, there is "the chicken and the egg" problem: Companies are reluctant to publish content in a new format before there is a significant installed base, and end-users are reluctant to purchase new hardware before there are a significant number of titles available in the new format.

By late 1998 or early 1999, there should be enough DVD hardware and software installed to make DVD a viable technology for business solutions. In fact, many companies are expected to start publishing application software and titles in the DVD-ROM format as soon as the second half of 1998.

Hurdle #5: Killer Applications. CD-ROM has allowed companies to publish compelling applications that are simply not possible in any other format. CD technology is currently used for a variety of business applications (e.g., corporate communications, data archival and retrieval, database publishing, education and training, entertainment, games, prototype development and testing, and sales and marketing brochures). CD is the preferred media because it is more cost-effective than other technologies (e.g., the floppy or the Internet).

Ultimately, DVD will clear this hurdle when end-users start demanding compelling applications that can not be published in the CD format. But just as it took CDs many years to surpass floppies as the preferred publishing format for corporate users, it too will take DVD many years to become the media of choice.

Several market research studies predict that by the end of 1998, more than 15 million DVD-ROM-enabled computer systems will have been sold. What are these systems going to be used for? It is likely that the "average" PC purchased for business use in the second half of 1998 will include a DVD-ROM drive and hardware or software to perform MPEG-2 and Dolby AC-3 decompression, which will enable business users to play DVD-Video titles published by Hollywood studios as well as DVD-ROM business-oriented titles published by Microsoft, Apple, and others.

It`s Time to Prepare for DVD

How should you prepare for DVD? The answer to this question depends on how your company or your customers are currently using CD technology. Business users can be broken down into two categories:

CD publisher. Companies that routinely publish content using CD-ROM or CD-R need to start formulating a transition plan to DVD immediately. Many of these companies will begin buying DVD-ROM-enabled computer systems within the next three to six months. But publishing content on DVD will require a whole new set of tools. These tools will not be cheap ($17,000 for a DVD-R writer), nor will they be bug free. And it will probably take at least three months to successfully complete a DVD project.

CD user. A company that routinely uses content published by other companies in CD-ROM or CD-R formats won`t need a transition plan until the first half of 1998. These companies probably won`t buy DVD-ROM-enabled computer systems until OEMs migrate DVD into their mainstream product lines. This time lag (about six months) presents an excellent opportunity to learn as much as possible about DVD and to search for opportunities to use DVD within the organization.

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Ralph LaBarge is president and chief technical officer of NB Digital Solutions, a developer of DVD-Video and DVD-ROM titles for corporate and government clients, in Crofton, MD. He is also chairman of the Software Publishing Association DVD-ROM Interactive Media Format Technical Working Group. He can be reached at rlabarge@nbdig.com.


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