Hewlett-Packard on Friday unveiled its much-anticipated HP-branded iPod, a deal that instantly gives the company a popular product and greatly extends the retail reach of its partner, Apple Computer.
Currently, Cupertino’s Apple has a healthy lead over its competition with its iPod digital music players and its iTunes Music Store.
But competition is heating up.
Other companies including Creative, Samsung and Sony have their own lineups of portable music players. Microsoft is expected to jump into the fray next week with its own online music service and an updated version of the Windows Media Player software.
As for Friday’s unveiling of the HP-branded iPod, analysts expecting the new music player to have a different look were disappointed.
Many had wondered if the new devices, which will be available in mid- September, would have a new appearance or possibly a new name. But the two models of the “Apple iPod from HP” are essentially identical to the two varieties that Apple already sells in its retail and online stores.
They come in 20-GB and 40-GB capacities and also carry the same price tag at $299 and $399, respectively. The iPod Mini is not part of HP’s lineup.
“Our focus with Apple was to get the first set of products out the door. We’ll see what happens after that,” said Perry Ralph, HP’s marketing manager of digital entertainment products.
As for HP’s iPod, the only difference is the small HP logo in the back of the unit, underneath the Apple logo.
“It’s another feather in the cap for (Apple CEO) Steve Jobs as a negotiator,” said Richard Doherty, an analyst at the high-tech industry research firm Envisioneering.
It’s a bit of a coup for Jobs because it looks as though he has given up very little in exchange for HP’s much wider retail reach, he said.
HP’s Ralph would not divulge the details of the business agreement between his firm and Apple.
HP did put a new spin on Friday’s announcement by also offering “HP Printable Tattoos” for the iPod. Consumers can first download album art or photos of their favorite musicians, or create their own designs by using personal photos. The image can then be printed on HP’s specially cut glossy paper with adhesive backing that wraps around the iPod. The cover should last three to four weeks, Ralph said.
HP will initially sell a pack of 10 blank sheets for $14.99, he said.
HP Chief Executive Officer Carly Fiorina, who was in Miami on Friday to unveil HP’s new products, called the tattoo a “great example of HP taking its great imaging (products) and combining it with” the iPod.
She also noted the iPod is just a piece of the puzzle for HP, which is trying to tap into the burgeoning digital consumer products market that has been predicted to grow to roughly $360 billion by 2007. On Friday, the company also unveiled nearly 50 other products including plasma and LCD TVs, a digital entertainment center, digital cameras, a portable photo printer and a new line of less-expensive ink for printing photos.
Fiorina was also in Miami to help kick off HP’s new advertising campaign, which will start during Sunday’s 2004 MTV Video Music Awards. In an effort to market its products to teens and the young adults, HP has signed on to be a global sponsor of MTV’s music awards in Europe, Asia, Latin America and the United States.
“Today’s young consumers are the world’s digital pioneers,” said Judy McGrath, chief executive of MTV Networks. “The 2004 MTV Video Music Awards has a potential of 1 billion young viewers around the world. This is a huge, loyal, digitally connected audience.”
While such deals are potentially lucrative for HP, one Wall Street analyst said HP still needs to do a better job of mapping out its overall strategy in consumer electronics.
Mark Stahlman, an analyst at Caris & Co., noted that the consumer electronics market is fiercely competitive and there are no guarantees that HP will succeed.
“The company has identified rich digital media as its largest growth opportunity and I was expecting to see a more laid out strategy in addition to just new products,” said Stahlman, who doesn’t own HP shares and whose company doesn’t have a business relationship with the firm. “It just leaves investors wondering how all this fits into larger growth prospects for HP.”
HP recently reported earnings that fell well below Wall Street estimates.
