Now that it has managed to keep both Compaq Computer and Hewlett-Packard PCs on store shelves, HP wants to make sure they stand out more from each other.
The company also wants to use the two brands to go after two distinct segments of the market, with HP attacking the high-end and the Compaq brand designed to compete on price and on bang for the buck. "One is going after Sony and Apple (Computer), and the other is going after Dell (Computer)," said Jim McDonnell, vice president of marketing in the personal systems group at HP. The outlines of that strategy started to take shape shortly after the merger was completed last May. The company positioned HP as its premium line, focused on multimedia, and said Compaq would be more of the value line. However, the product lines have retained a fair measure of similarity thus far.
"You will start seeing the products actually start changing in the spring with more differentiation," McDonnell said. One form that will take is more HP-branded systems using Microsoft's Windows XP Media Center operating system. Those systems, which can record TV programs like a TiVo box and display digital photos on a television, have been doing well by most accounts, but make up only a small fraction of total consumer PC sales. By this time next year, though, such systems could make up 10 percent to 20 percent of consumer PC sales, McDonnell said. "That helps us not only with selling Media Center PCs, but also in an overall halo" for the HP brand.
HP has said it sold as many Media Centers as it made during the first quarter, but hasn't said how many that was. Stephen Baker, who covers the retail PC market for NPDTechworld, said such machines made up only a small single-digit percentage of retail sales, as prices remained high. However, Baker said sales could pick up as lower-cost models hit the market as prices fall for the components needed to make a Media Center PC.
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