TDK's Bailey paints the problem in broader terms. To cut their losses, these Taiwanese manufacturers sold their inventory at a loss just to get it off the books. To keep pace, the royalty-paying companies also dropped their prices. This may be true, but Rich Gadomski, national marketing manager at Maxell, projects things differently. Prices will go up, but you may not see a dramatic impact at retail.
Prices go down in a steady line for the end-user.
For a manufacturer to maintain prices, or not drop prices, is tantamount to a price increase. According to Philips, terminating Ritek's license agreement is an attempt at maintaining market stability. Gadomski sees the Ritek affair as Philips making an example of one company that is representative of a corrosive trend in the industry. If Ritek, the largest manufacturer of CD-Rs, agrees with Philips, it will set a good precedent. In the meantime, Ritek can still construct discs through Maxell as they have a sub-contract.