HP plans to link TVs, stereos to the Web
Hewlett-Packard Co., best known for its printers, personal computers and servers, will try to extend its brand into consumers' living rooms with news Wednesday of a device that connects stereos and televisions to the Internet.
The HP Digital Entertainment Center is designed to download, store and play compressed music files from the Internet as well as offer limited streaming of music videos to the TV. It is packaged as an ordinary-looking stereo component that stacks inside a stereo cabinet and will cost a little less than $1,000.
HP, of Palo Alto, Calif., will demonstrate the device next week at a technology conference in New York and says the product will be ready to ship by Christmas.
"It's an Internet appliance on steroids," said John Spofford, HP's vice president and general manager of personal storage. "It changes the way people will listen to their music."
Dismal times for PC business
HP's move deeper into consumer products comes during dismal times for its consumer PC and peripherals business. Although the company says its consumer unit remains profitable, revenue slipped 8 percent in the three months ended April 30 from a year earlier.
The business was especially hurt by a 15 percent decline in overall U.S. market demand for PCs this spring.
Although HP's latest consumer product incorporates technology from the PC, including enough memory to store as many as 750 CDs, HP says it is as easy to use as more traditional electronic devices. For example, users will be able to access the Web with the flick of a switch, without waiting for the traditional "boot-up" phase every PC requires.
The company expects to make money from hardware sales of its Digital Entertainment Center, as well as from a share in music-subscription services and e-commerce transactions, Spofford said. HP has held discussions with most of the major music labels about establishing music subscription services, he said. He declined to provide further details.
Analysts say the product announcement marks new ground for HP and the Internet-appliance business, although it may take time for consumers to warm to the technology.
"This is something that will get hot around Christmas 2002," said Rob Enderle, a research fellow with Giga Information Group, Santa Clara, Calif. "This first generation of products will be for the early adopters."
Enderle said the technology will become more popular when it includes not just home stereo capabilities, but also services that can be transferred to automobiles and personal mobile players.
Last week, Compaq Computer Corp., of Houston, said it would begin shipping a similar product to HP's on July 15 for $799. Dubbed the iPAQ Music Center, the device stores as many as 400 CDs on an internal hard drive and allows users to listen to, or purchase, music from the Web.