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Tuesday, January 13, 2004 - Page updated at 11:46 A.M.

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CES 2004: HP plays the iPod tune with Apple

By Kim Peterson
Seattle Times technology reporter

JOE CAVARETTA / AP
Music celebrities joining Hewlett-Packard CEO Carly Fiorina at the Consumer Electronics Show yesterday in Las Vegas are, from left, Toby Keith, Sheryl Crow, Dr. Dre, record producer Jimmy Iovine and U2's Edge.
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LAS VEGAS — Two industry giants forged a dramatic new relationship yesterday when Hewlett-Packard said it would sell a version of Apple Computer's popular iPod music player and include Apple's music software in its machines.

The deal is a major coup for Apple, particularly because HP has historically been a strong partner with Microsoft. It also adds the market's leading portable music player to HP's lineup of consumer products.

"HP has the scope and the scale and the supply chain to mass-market to a wider audience than (the iPod) has ever seen before," HP Chief Executive Carly Fiorina said in a keynote speech yesterday at the Consumer Electronics show.

The announcement capped a day of talks by some of the biggest names in the industry focusing on giving consumers access to tried-and-true entertainment — movies, music and photos — in new ways.

In fact, moving digital music, photos and movies from one machine to another in the home is emerging as a major theme in the increasingly competitive industry, even though the concept is still foreign in many U.S. households.

Microsoft Chairman Bill Gates kicked off CES on Wednesday night by discussing his company's technology that lets people view content from their Media Center personal computers on the television. Yesterday, HP, Panasonic and others announced their own variations of this theme.

Many companies are rolling out products this year that work best with a high-speed Internet connection and a fast home wireless network. But most Americans haven't installed those home networks, which can be expensive.

That presents a dual challenge for consumer electronics companies, which must debut innovative, wirelessly connected products and at the same time persuade customers to upgrade their homes to use them.

Intel highlighted the problem in a video shown yesterday during a speech by Paul Otellini, president and chief operating officer. The video, called "Digital Eye for the Analog Guy," was a takeoff of the popular television show "Queer Eye for the Straight Guy."

In the video, a team of techies take over a home, throw out a home-entertainment system cluttered with cables and cords, and replace it with a TV and a device the company calls the Entertainment PC. The machine, a slim PC that connects to a TV screen, can organize and share digital content wirelessly throughout the home.

"That Entertainment PC is going to redefine the living room as much as the original PC ended up redefining how we work," Otellini said.

But companies here at CES don't have a "digital eye" team to integrate their products in everyone's homes. Instead, they are hoping that one word in particular will motivate customers to do it themselves: content.

The word seems to be everywhere at the show, as companies talk about how to access it, play it, store it and move it around. Content could be a pop song, a home movie, Christmas photos or the latest Hollywood blockbuster — just about any entertainment that can be digitized.

The industry seems to be entering a period of intense competition, where every major company is introducing its own ideas and products for sharing digital content. No company dominates, and several are jockeying for a leadership position.

"The devices are just starting to come up now," said Steve Baker, analyst with the NPD Group. "What needs to happen is more demand for it and the ability to supply those devices on a cost-effective basis."

JUSTIN SULLIVAN / GETTY IMAGES
Hewlett-Packard Chief Executive Carly Fiorina delivers a keynote address at the International Consumer Electronics Show in Las Vegas yesterday.
While its new partnership with Apple captured the spotlight, HP also said it will introduce an entertainment hub this fall that can act as a central place to store and access movie, video and photo collections. Users can also pause live TV and record shows from any source, including cable and satellite programming.

"We believe the real revolution that is taking place today is different, cutting far deeper and far broader than simply the devices that flew out of the stores this past holiday," said HP CEO Fiorina. "We believe that the true revolution is around the experience and making the whole system come together."

Fiorina also announced that HP will try to build copy protection systems into every one of its consumer devices this year, and was joined on stage by several big-name musical artists, including Alicia Keys, the Edge, Sheryl Crow, Toby Keith and Dr. Dre.

The teaming with Apple, meanwhile, begins this spring and also includes a deal in which HP's consumer PCs and notebooks would come preinstalled with Apple's iTunes jukebox software. An iTunes icon would appear on the desktops of new machines.

The iPod and iTunes have become winners for Apple — a company that in the past has shunned partnerships — and the HP agreement is another sign that the company is continuing to make advancements against Microsoft, its longtime rival.

HP also said it is giving its iPaq personal organizer the capability to become a remote control for entertainment devices and to access digital content. The company said that 54 percent of its current customers download music onto their personal computers.

Another major name, Panasonic, unveiled "Lifestream" products that can share digital content, and showed off a new way to connect machines on a network with electrical wiring.

"Today, home networking is not simple and easy," said Paul Liao, the chief technology officer of Matsushita Electric Corp. of America, which markets the Panasonic brand. He showed new technology being developed at Panasonic that could transmit video from one television set to another just by connecting their electrical cords. A separate video cable was not necessary.

Panasonic also showed a remote control for the lights, air conditioning and appliances in a home and that could manage a home entertainment center as well.

Dell Chief Executive Michael Dell did not announce any company news during his speech. He said the industry has different ideas about whether the TV, the PC or some other device is at the center of the home.

"The PC remains the most versatile invention in history and continues to play a vital role in the digital home," he said.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com


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