CyberHome Halts DVD Player Production in Royalty Flap
CyberHome stopped making DVD players in an apparent bow to pressure from Philips for patent royalties, sources said. The Taiwan-based company’s battle with Philips peaked in June (CED June 15 p4) when Cal. and U.S. agents seized 20,000 allegedly unlicensed CyberHome DVD recorders, valued at $2 million, in L.A. Philips claimed it was owed $22 million in royalties. In Aug., CyberHome stopped shipping DVD recorders to the U.S., although the CH-DVR 1500 progressive scan DVD+RW deck was listed Wed. on Amazon.com at $80.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
CyberHome carved a niche in the U.S. market as a low-end supplier, providing national chains from Wal-Mart to Best Buy with promotional fodder for Black Fri. specials in Nov. But it seems to have pulled back from the U.S. market and sources said the company’s Fremont, Cal., office closed. Calls to CyberHome’s U.S. hq went unanswered Wed. and its customer service line carried a message saying “phone and email [product] support currently is not available.”
This has left supply of entry-level DVD players “relatively tight,” a retailer said. Retailers also seem to be focusing less on promoting DVD players and recorders for their Black Fri. sales. Wal-Mart is said to be poised to set a low-end benchmark for portable DVD models this year, industry officials said.
“They ran into trouble with Philips and some of their customers contacted us and we're pumping stuff out as quickly as we can,” said Steve Search, national mktg. mgr. at Coby, which runs 2 plants and will have a 3rd in volume production by 2007. “It definitely drove some business our way,” Search said. Coby DVD players and recorders are roughly on par with CyberHome models in features and price. Coby’s DVD-224 compact DVD player ($29) and DVD-237 progressive scan model ($26) were being promoted at Amazon.com on Wed.
CyberHome’s rapid fall sent retailers scrambling to find suppliers of low-end DVD players to fill the void in time for the holidays, officials said. Through Aug., CyberHome DVD player sales were slightly less than one million, down from 2.5 million the same period a year ago, said Steve Baker, analyst at NPD, whose figures don’t include sales via Wal- Mart. CyberHome faced competition from China-based DVD player suppliers, but Philips also pushed harder on royalty claims of $3-$5 per player, said industry officials. Philips officials weren’t available for comment at our deadline Wed.
CyberHome, a key vendor to Wal-Mart, emerged last year as the chain’s supplier for a $99 DVD+RW recorder (CED May 15/05 p4) to star in Black Fri. promotions. At the time, Wal-Mart was selling its private label Ilo DVD+RW recorder at $149.