HP Digital Entertainment Center Coming to a Halt

Just a week after Apple Inc. shipped the Apple TV, Hewlett-Packard Co. (HP) has decided to stop developing new models of its Digital Entertainment Center line in favor of a simpler, more consumer-friendly design, HP said Wednesday.

HP designed the Digital Entertainment Center (DEC) as a sophisticated product with a full complement of audio/visual ports to connect to any television set, according to Pat Kinley, public relations manager for digital entertainment at HP. The product, more expensive than PCs running Microsoft Corp.'s Media Center OS and designed to look more at home in a living room than a typical PC, was pitched to specialty retailers selling custom installations for high-end home theaters, she said. The company will now stop development of the line, although it will sell and support the remaining units in the marketplace.

"We have other products on the market now and future products that I can't talk about that perform essentially the same function in a way that's easier for the consumer [to use]. We're moving to a scenario where the TV itself can be attached to the home network, the MediaSmart TV," Kinley said.

As recently as September, HP had launched two DEC models, saying the z565 and z560 could serve as high-definition digital video recorders as well as managing music collections and creating digital photo slide shows. The machines run Microsoft Corp.'s new Windows Vista Premium OS, offering up to 800G bytes of hard-disk capacity and Intel Corp.'s dual-core processors and Viiv entertainment bundle.

By packing so much power into the DEC, HP was moving away from the market trend toward less-expensive devices with simpler interfaces, such as the Apple TV set-top box, one analyst said.

"The home theater buff is becoming more and more of an endangered species, because high fidelity has given way to convenience," said Josh Martin, an analyst with The Yankee Group. The popularity of portable music players like Apple's iPod has shown that most users are willing to trade the quality of music recorded on CDs for the mobility of music stored as MP3 files.

This trend won't reduce demand for PCs running Windows Media Center Edition OS, however. Users still need to manage their personal and Web-based media, and the PC is a far better tool for that job than the TV, Martin said.

HP's move is logical, according to Richard Doherty, research director at The Envisioneering Group in Seaford, New York, adding that "no one has tried harder than HP" to make the promise of Media Center software work. But given its other efforts in the digital home arena such as Media Vault and Media Smart TVs, it makes sense to refocus, he said.

Martin sees vendors meeting the increasing demand for simplicity with a new class of TVs that can play digital content stored on PCs, USB (Universal Serial Bus) devices or networked storage without relying on an additional set-top box. By beginning its transition to that model now, HP could get a jump on its future competitors. The connected TV is not a mass market yet, but future producers could include traditional television set makers such as Sony Corp., Samsung Electronics Co. Ltd. and Pioneer Corp., as well as router makers like Netgear Inc., D-Link Systems Inc. and Cisco Systems Inc., and gaming console makers like Microsoft and Nintendo Co. Ltd.

The winning formula in that market will be ease of use and simplicity, Martin said.

(With additional reporting by Elizabeth Heichler in Boston).

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