HP unveils its iPod, entertainment media center

Hewlett-Packard (HP) is hot about what it considers a consumer revolution in digital media, and on Friday the company's Chairman and Chief Executive Officer Carly Fiorina selected a chic club in Miami Beach to unveil a raft of consumer electronic devices, including HP's version of Apple Computer's iPod, and pledge her company's commitment to this market.

"We believe we have just begun to scratch the surface of what is possible," she said. "We have leadership positions and intellectual property at every stage of the value chain so we see this as a huge growth opportunity for HP for many years to come."

The market for digital entertainment devices and services worldwide stood at US$500 billion in 2003 with growth year-over-year expected in the 6 percent to 8 percent range, Fiorina said. HP estimates its addressable market in 2007 will be around $360 billion, she said.

"This is a journey not just for this company. It's a journey the whole world is taking," Fiorina said, standing on the stage of the Barton G. club and restaurant on Miami Beach's famed Ocean Drive boulevard, during a press conference Friday morning.

"The most significant and noteworthy point from today's announcements was that HP is making a statement that it's not a computer company anymore, but that it's a digital media company," said Phil Leigh, president of Inside Digital Media, a market research company.

This is the right way to go for HP, because as computing devices for consumers get faster and more powerful, users aren't looking for flashier word-processing applications, Leigh said. "The applications of the future are digital media applications," he said.

As HP pushes into consumer electronics it will face a new type of customer, said Tim Bajarin, an analyst with Creative Strategies. These customers aren't as comfortable and knowledgeable about technology as the traditional HP customer, creating a new challenge for the company: to provide world-class support to this type of user, Bajarin said. "This is especially true of older consumers who aren't technically-savvy, and who tend to call up tech support often," he said.

Among the products Fiorina presented were HP's version of the iPod, branded as the Apple iPod from HP, and the new HP Digital Entertainment Center, a device designed for living rooms and for managing digital music, movies and photos. Also announced was a new brand of printer ink called Vivera that Fiorina said will extend the life of printed digital photos, a new notebook PC that can play DVDs without fully booting up its operating system and plasma and LCD (liquid crystal display) flat-panel television sets.

"Behind me and in the room next door and upstairs you're going to find really as many innovative products as there are P. Diddy sightings in South Beach this weekend," Fiorina joked, referring to the MTV Video Music Awards show, taking place in Miami on Sunday. Fiorina also announced a broad sponsorship deal with MTV to reach its viewers, who are predominantly between the ages of 12 and 34 and thus savvy and heavy users of digital consumer products.

The Digital Entertainment Center is designed to be a hub for managing digital content such as music, movies and photos from a single device located in the living room. The four-inch tall device, scheduled to ship in the fourth quarter, contains a personal video recorder, a digital video recorder and a DVD, and is managed with a remote control. "It is a couch potato's dream," Fiorina quipped. No pricing information was given for this product.

Meanwhile, the Apple iPod from HP will begin shipping in early September in two versions: a 20G-byte version costing US$299 and a 40G-byte version costing US$399.

HP's intention to partner with Apple on the iPod was announced in January at the Consumer Electronics Show in Las Vegas. On Friday, Fiorina reiterated the reasoning behind the partnership: "We thought about creating our own devices and our own music service but ... we saw one company whose innovation (in this space) we admired who had both the best music device and service by far," she said.

In mid-September, HP will launch what it calls iPod "tattoos" for users to dress up their iPods. The self-sticking paper will be preconfigured to fit the iPod, allowing users to print either premade designs or self-made designs, she said. "One thing we know about today's consumers is they want to connect emotionally to their products," she said. The so-called HP Printable Tattoos will be easy to apply and remove and be water-resistant, she said.

"It is a great example of HP taking our digital imaging experience and combining it with music," she said.

"The iPod gives HP a best-of-breed MP3 player and lets HP enhance its position in the music space by going into it with a high quality player," Creative Strategies' Bajarin said.

Fiorina also introduced the HP Instant Cinema Digital Projector ep9010, which combines a projector, DVD player and a stereo/subwoofer sound system, which she described as "a boombox for movies." Estimated retail price for this product is US$1,999. It will ship in the third quarter.

This product is quite unique due to its portability, Creative Strategies' Bajarin said. He envisions that this concept of a mobile video theater could prove attractive to a broad array of users, from civic groups to people throwing parties in their homes, he said. "It has the potential to open some new doors ... and possibly become a (product) category in its own right," he said.

Also announced was the HP Pavilion Entertainment Notebook dv1000, which Fiorina said cuts down the time for preparing to play a DVD in such a machine from about 2 minutes to around 8 seconds because an HP technology called QuickPlay does away with the need to load the entire operating system for playback. This notebook will be available in retail stores in October while configure-to-order models will be available in late August. Prices start at US$999.

Meanwhile, the new Vivera printer inks extend the life of printed photos from about 20 years to about 80 years using a 3-ink system, and from 75 years to 110 years using an 8-ink system, letting users "put your digital photos in an album for your great-great-great grandchildren to enjoy a century from now ... as clear then as they are now today," Fiorina said.

Among the new TVs, the HP 42-inch High-Definition Plasma set stands out, at US$4,999. The HP 30-inch HD-ready LCD TV goes for US$3,499.

More information about the products announced Friday can be found at www.hp.com/go/digitalexplaunch/2004.

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