History 2000: Ritek Floods Europe with Low-Cost CD-Rs

The small world of CD-Rs in Europe is abuzz with the news: Media-Markt, a giant German distribution chain and Metro subsidiary, has just packed the shelves of its supermarkets with 10-packs of 650MB, 74-minute 12X-compatible CD-Rs made by Ritek, under the Fujitsu-Siemens label, for DM9.90 (the PC maker, incidentally, hawks its Lifebook computers on the packaging).

We confirmed this with Media-Markt TVHiFi Elektro GmbH in Frankfurt, as well as on the chain’s Web site.

Apparently, some even sell for DM8.90 (or 41 cents per disk), although we were unable to confirm that price.

In France, the same pack sells for FF39.90 at Hypermedia, also part of the Media-Markt group. This price includes not only VAT, but also a CD-R tax, nonexistent in France for the moment, but which amounts to 5% of the price in Germany.

Most, however, is the enormous volume flooding the European market, perhaps as much as 50 million disks, roughly 70% of which for the German market alone, the rest throughout Europe. This volume, in other words, represents nearly 10% of the entire European market for 1999.

If we hesitate on these figures, however, it’s merely because Media-Markt’s spokesperson did everything he could to avoid taking our call to confirm the maneuver, which we heard about from several optical disk professionals.

Such low prices have caused something of an aftershock for CD-R distributors, who frequently buy their disks at a higher price.

According to our sources, some major European distributors for Ritek – BASF’s name was mentioned several times – may soon be looking elsewhere for their supplies.

Yannick Penosales, director at Maxell France, ventured an opinion: “The damage has been done, and we’re in danger of finding the price at FF34.90 by this fall. Ritek fails to understand how consumer distribution works. Sure, there are huge promotions from time to time, but distributors also must make sure that the products they sell have a sufficient general price level. The problem for brand names like ours is that the current young gen have almost no brand recognition. Many of the younger CD-R buyers have never even purchased audio cassettes.”

Christian Dazy, GM of Verbatim France, is less concerned: “Of course, we are forced to be responsive, and to adapt our sales policy daily for such a volatile market. At the same, despite all this Ritek business, our products are continually sold out.”

Will this pricing free-for-all persist? Recall that nearly all floppy disks in the early days sold for roughly $4 directly from the factory, and that the price is currently around 8 cents.

Today, more CD-Rs are sold than floppies, and the cheapest in Europe can be found for 35 cents in OEM quantities.

The price drop has also affected CD-RW disks, which have now fallen to 73 cents per unit in the same quantities.

Europe, however, hasn’t quite caught on to the even lower prices in the US. The best deals are for non-branded disks, of course, but even so: – from Meritline, a 10-pack sells for $4 – from Memorymedia, $120 for 400 CD-Rs, or only 30 cents per disk!

Ritek, founded in 1998, is the largest Taiwanese optical disk manufacturer in a country that boasts a sizeable industry. The firm employs 3,000 people worldwide, with annual sales of $500 million, 40% of the WW CD-R output this year and a market capitalization of $5 billion. It has a joint-venture by the name of MRT Technology LLC in City of Industry, CA, just announced with 300 employees and a $100 million expansion plant in Ontario, CA (40 miles east of Los Angeles) to add ultimately another 300,000 square feet of manufacturing space.

This article is an abstract of news published on issue 149 on June 2000 from the former paper version of Computer Data Storage Newsletter.