The PC To CE Stampede

Times are obviously tough for personal computer manufacturers, who, in the quest for new sources of revenue, are increasingly dipping their toes into consumer electronics waters. The latest firm to join IBM, Intel, and Compaq (see previous) in the rushing stream is Hewlett-Packard which announced last week the expansion of the company's drive into the living room. HP says that its new initiative is intended to "blend interactive product innovations with easy-to-use services and offer consumers new ways to enjoy digital music, streaming video, and Internet information in the living room."

The company's first "living room" component is called the HP Digital Entertainment Center, and is described as a stand-alone product that allows users "to discover new music on the Internet and enjoy their complete music collections from the comfort of their living rooms through high-quality stereo equipment—without the need for a PC." HP says that a prototype of the HP Digital Entertainment Center will be first demonstrated at TECH EXPO in New York City next week.

HP's Pradeep Jotwani says that "the expansion of HP's digital entertainment product portfolio is a natural diversification. HP plans to leverage its expertise, strategic relationships, and knowledge of customer needs to position itself at the forefront of this quickly evolving market." The company's John Spofford adds that "HP has been a global leader in CD-writers for more than five years, bringing audio digital entertainment to the public. We understand our customers' desire to bring Internet-based, digital entertainment into their living rooms, where they can benefit from the best stereo equipment in the house."

Why this mad rush into the treacherous waters of consumer electronics? Forecasters appear to be egging the PC companies on: According to Cahners In-Stat, worldwide shipments of products of this nature are expected to grow more than 900 percent by 2003, and Webnoize expects the number of online radio listeners to approach nearly 40% of the US population the same year. HP's Jotwani notes that "the market opportunity for digital entertainment products for the living room, beginning with digital audio components, is significant. The HP Digital Entertainment Center is ideally positioned to meet this demand."

Features of the HP DEC include the ability to record music to CDs with a built-in CD-writer, as well as to transfer stored music to select MP3 players, handhelds, and memory card readers. Consumers can also use its built-in connectivity to download music and artist information to access streaming video through dial-up, DSL, or cable connections, and then to store, manage, and automatically catalog these streams or up to 750 CDs (approximately 9000 tracks). Like Compaq's new $800 iPAQ Music Center, the HP DEC uses a video display to let users view music selections and other product features. HP says that the Digital Entertainment Center is expected to be available in time for the 2001 holiday season and that pricing will be determined at that time.