HP Makes Digital Music Plans

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Following the lead of several competitors in the PC industry, Hewlett-Packard plans to announce a digital music player, a digital music store, and a line of digital televisions early next year, an HP spokesperson said Wednesday.

While declining to provide details on the new products, the spokesperson said that HP will make some "exciting announcements for consumers" at the Consumer Electronics Show in Las Vegas in early January.

Change of Plans

The robust growth rate of the consumer electronics market has captured the attention of many PC companies. Gateway has embarked on an aggressive plan to drum up new sources of revenue from digital televisions, digital cameras, and music players.

Similarly, Dell has launched an effort to market digital televisions and music players, along with a music download service in partnership with Musicmatch.com.

Apple may not sell as many computers as Dell or HP, but the company's IPod device and ITunes music store provided the model for both companies' efforts to enter the music market.

Photography and Beyond

HP's consumer electronics initiatives to date have focused on the digital photography market. The Palo Alto, California, company's printer division is its most profitable and dominant in the market, and HP has sought to build off that strength with digital cameras, printers, and PCs that help consumers create, edit, and print digital images.

The company signaled its intentions to enter the broader consumer electronics market earlier this year. Jim McDonnell, vice president of sales and marketing for HP's personal systems group, said in September that the company would likely introduce a line of digital televisions containing features such as built-in DVD players.

McDonnell pointed to the music market, along with digital photography, as a major force behind the consumer electronics market.

Survival Strategies

Though many different companies have identified digital music as a hot market, their strategies for entering the market vary, and it's too early to tell which plans stand the best chance of survival, says Stephen Baker, director of industry analysis for NPD Techworld in Reston, Virginia.

Digital music stores aren't generating a great deal of revenue for their owners right now, Baker says. Hardware vendors like Dell, Apple, and HP will try to build their stores by linking them to their music players; but retailers like Wal-Mart and Best Buy have the opportunity to supplement their in-store music business with an online download service, too, thereby protecting themselves against further erosion of the retail market, he says.

HP could add other features--such as expansion slots, color screens, or wireless capabilities--to its music players in hopes of attracting the higher-end consumers, Baker says. Most music players sold to date have come with small black-and-white screens and no capabilities beyond storing digital audio.

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