New Breed of Media PCs Could Revive Slow Market
Hewlett-Packard Co.’s most modern line of personal computers, which can record and make copies of television shows, hit the market a month late and 35% over its intended price.
Andy Dietler couldn’t care less.
The 22-year-old Web site developer lives in an one-bedroom apartment in downtown San Francisco, and when he’s there, he uses the HP Media Center PC to listen to his music collection and to mix and burn CDs of bands such as Postal Service, Coldplay and the Flaming Lips. When he’s not there, the Media Center records his favorite television shows, including “King of Queens,” “Friends,” “Scrubs” and “Law & Order.”
Dietler said he bought the Media Center “definitely for the TV functionality.” He had been looking at the TiVo personal video recorder, which stores television shows on a hard drive but isn’t connected to a computer and requires a monthly subscription.
“I thought the Media PC was a better match,” said the Alamo, Calif., native. “It’s easier to add your own hard drive and other functionality. And there’s the possibility of burning DVDs. Seems pretty much everything I’d want is in there.”
The company doesn’t release sales figures, but analysts say HP’s version of the new breed of PC is so popular that some stores haven’t had enough of them in stock to meet demand. In fact, some say, multifunction TV-PCs could rekindle the sluggish PC market by appealing to consumers eager to replace their computers, photo albums, CD, DVD and VCR players and TV sets with one single machine.
That’s all good news for HP, which has been losing PC market share to fast-growing Dell Computer Corp.; PC revenue at HP was down 18% in the fourth quarter, while Dell’s PC revenue was up 20%.
“The Media Center was a notable win” for HP, said Roger Kay, director of client computing at technology market researcher IDC. “I think it’s really going to revive computer sales this year.”
Just last summer, the Media Center wasn’t looking so promising.
Engineers and product developers at HP’s labs in Cupertino had put their heads together in the fall of 2000 to come up with the next big thing. Working closely with Microsoft Corp., the HP team settled on an ambitious project to merge computing and entertainment -- to build a device that would edit, store and burn to CD or DVD discs music, photos, digital video and even television shows. The whole package would be made attractive and so easy to use that consumers might not have to open the owner’s manual.
Team members were still wrestling with design and functions while they watched their deadline, the beginning of the school year in September, hurtling closer. “We completely missed that target,” recalled Dick Grote, HP’s vice president for consumer PC product development.
Another goal, he added was to price the system starting at $999, including monitor. Instead, it came in at $1,350.
“We had a lot of heartburn with this PC,” Grote said.
It probably was worth it. When the HP Media Center PC came out in October it garnered generally good reviews. PC World Magazine wrote that the machine “enables you to do more than merely create digital content: It also gives you new ways to luxuriate in it.”
Today HP is launching two new Media Center PCs with more power. They will have faster Pentium 4 processors and larger graphics memory. And they will be able to burn DVDs of television shows that can be viewed on virtually any DVD player -- a trick that until now required downloading a software patch or purchasing an additional program.
The model without speakers will be priced at $1,400 and come with a 120-gigabyte hard drive that stores up to 80 hours of recorded television; the $1,700 model will have a 160-gigabyte hard drive capable of holding up to 100 hours of TV shows.
Hooked up to the Internet, the Media Center automatically retrieves television-guide information about two weeks ahead of the air date and displays TV broadcasts clearly. By clicking through menu choices with a remote control or mouse, users can choose to play TV shows or record them -- one show only, a whole series, or only the nonrepeat broadcasts.
The PC-television combo isn’t a new idea. Gateway Inc. sold a TV-computer called Destination starting in 1996. But the technology was cumbersome and, starting at $5,000, it was too expensive for widespread acceptance. Gateway pulled the plug in 1999.
Still, Gateway continued working on other models. And today Gateway is the only volume computer manufacturer besides HP that sells a multifunction PC-TV that runs on a new version of Microsoft’s Windows XP operating system called XP Media Center Edition. The Gateway Media Center typically starts at $1,700, including a 17-inch flat-panel screen. A DVD burner costs $130.
Gateway also sells its Media Center in a $4,100 package deal with its huge 42-inch plasma television.
“The market is getting ready for these convergence products, and we think that will really explode in 12 to 18 months,” said Gateway spokeswoman Lisa Emard.
Smaller vendors, including ViewSonic Corp., Alienware, Northgate Innovations Inc., Samsung and NEC Corp., have their own media center offerings.
Sony Corp.’s multifunction TV-PC is called Vaio Digital Studio. It hit the market in 2001, more than a year before the Microsoft-based models. But Sony, the eighth-largest PC vendor in the United States last year, hasn’t sold large numbers of the machine.
Toshiba, meanwhile, will put out a media center laptop in the spring.
As for Dell, the country’s biggest computer maker, it is biding its time. “We are evaluating it,” said Dell spokesman Jess Blackburn. “We think consumers are certainly going to be finding value in the convergence of an entertainment-type device with” a traditional PC.
“It’s ‘watch this space’ sometime in the near future,” he said.
But at Apple Computer Inc., which uses its own proprietary operating system, executives have decided against marrying TV viewing with personal computing.
“The idea for a lot of customers to move their PC right next to their television or entertainment center isn’t exactly going over well,” said Greg Joswiak, Apple’s vice president for hardware marketing.
“When it comes to how these things work in the living room, we have what we think is a better approach, which is not that the computer has to go right next to these devices, but that all these devices should talk to each other.”
Media Center fans point out that all a user has to do is plug the cable TV cord into the back of the PC to essentially turn it into a television.
“We are absolutely bullish on the fact that this is an important turning point for the PC,” said Jodie Cadieu, marketing manager for the Windows EHome Division of Microsoft.
HP joined Samsung and NEC in collaborating with Microsoft to develop the Windows XP Media Center Edition operating system. But HP was the most deeply involved, working closer with Microsoft than it ever had.
At HP, designers and engineers also focused on the “form factor,” the shape and appearance of the Media Center PC, which was designed with a cramped dormitory room in mind.
HP settled on a sleek, industrial black-and-silver look, and designed the buttons on the computer and keyboard to resemble consumer electronic controls. It chose not to install an LED display on the computer’s tower body, however, since research showed most users store that on the floor, out of sight. Instead, a separate infrared device that can be placed anywhere to receive remote control commands was designed.
“This is a totally different industrial design that we have in any other product,” Anderson said. “Making the buttons on the front work was not trivial.”
Dietler, the San Francisco fan, has friends who fiddle with their Media Centers to get them to do such things as make recordings off the Internet while they’re asleep. He wonders whether the Media Center of the future might not do a lot more, such as turn on the lights in his house as he’s pulling up outside in his car or turn off the oven when the roast is done.
HP and Microsoft wouldn’t comment on the full range of capabilities of the next-generation Media Center PC, due out later this year. But sources familiar with the development effort say it will integrate at least one more tried-and-true entertainment function: FM radio reception.
