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CD-RW vs. CD-R
At casual glance, it might seem that CD-RW is "better" than CD-R and therefore "replaces it". In fact, I think it likely that CD-RW drives will replace CD-R drives as prices come down and the technology matures. The reason is simple: the CD-RW drives don't cost a lot more than CD-R drives, they have the ability to write CD-R disks just like CD-R drives do, but they also can write CD-RW media. Therefore, they have more capabilities and really, no drawbacks compared to CD-R, other than a small amount of cost.
The media is a different matter. I do not think that it is likely that CD-RW disks will replace CD-R disks, for several reasons:
For these reasons, CD-RW is often said to "complement" CD-R, instead of replacing it. Since the drives support both media, users have a choice of which they wish to use. One common application is the use of a CD-RW disk for testing out the creation of a disk. Since it is rewriteable the disk isn't wasted in the event that the user omits a file by accident or whatever. The disk can be developed using a single CD-RW, and once perfected, burned onto regular CD-R, greatly reducing the number of "coasters" created by accident.
It should also be noted that both CD-R and CD-RW are still just becoming reasonably commonplace on the market, and DVD is gaining quickly behind them. As DVD advances it is quite likely that many buyers will skip both recordable CD formats in favor of DVD-RAM, the rewriteable version of DVD. Only time will tell on this score, of course.