Friday, March 30, 2007

Or Maybe Not

It was widely reported yesterday that HP is pulling out of the Media Center PC market. Some people seem to be interpreting this announcement as proof that the Entertainment PC is a complete failure or the market for home theater PCs or entertainment PCs isn't large enough for companies like HP to commit valuable resources. I also received an email from The Diffusion Group, a market research firm, with a pretty pessimistic outlook for HTPCs. Here's a link to the PDF version, if anyone is interested. It's really more of an "I told you so" kind of message, but it also reminds me of similar comments from analysts saying the potential market for MP3 players was very limited before the iPod was introduced. Maybe it will take someone like Apple to finally figure out the right design and combination of features. However, HP has gone on to say that they are not abandoning the Media Center business because their latest PCs ship with Vista, which includes Media Center software. They explain that they just aren't going to sell their Digital Entertainment Center (DEC) PCs any more.

These Digital Entertainment Center PCs were designed with a "living room" form factor so they look more like a consumer electronics device than a computer (see image to the right). I'm sure they sold some of these, but obviously not nearly enough to satisfy HP. So, I wonder why they didn't sell more. Maybe because many HTPC enthusiasts thought they were too expensive and didn't provide enough performance. You could easily build a similar PC with better performance for probably half the price. Also, a lot of the HTPC enthusiasts enjoy building there own PCs and the cost savings from doing this, so a prebuilt HTPC is not very attractive, unless it has something you can't purchase on your own (like CableCard, which I won't cover in this post). So they certainly didn't sell well to the enthusiast, which are typically the early adopters. And where can you go with a product if you don't have many early adopters?

Instead they will focus on their new MediaSmart TVs. These function similar to an LCD TV with a built-in Media Center extenders. You just have to connect it to your home network and it will allow you to share or stream any music, photos or videos stored on your computer's hard drive. It actually sounds like a more flexible Apple TV (I haven't really looked into the Apple TV yet, so feel free to correct me if I'm wrong). Instead of using Microsoft's Media Center software, HP has developed their own applications for serving and manipulating content. Here's what Charlie White at Gizmodo had to say about it:

"The HP SLC3760N 37-inch MediaSmart LCD TV is a 1366x768 flat panel display with an HDMI input and a couple of speakers on the bottom. So far it's pretty conventional, but it gets into the world of convergence when you hook it up to your network and then it can stream video, photos, audio and the Web from any computer in the house. Nothing special here, folks. It's pretty pricey for $2700, considering that you can get a LCD TV that's this same size and resolution for $1500 less, and then hide a cheap networked PC behind it running Windows XP Media Center Edition. More capabilities, $1000 less. HP must be aiming this MediaSmart product at the MediaDumb. Nice try, HP."

Maybe HP believes the Apple TV will be a huge success like the iPod and they'd like to jump into this business at a much earlier stage.

I have to admit these types of announcements kind of bum me out. I certainly don't think that HP's decision to stop selling their Digital Entertainment Computer line is good news, especially when we are trying to develop an audio product that somewhat depends on the success of these types of PCs. Anyhow, there are still quite a few companies offering HTPCs, like Sony, Niveus, and Velocity Micro.

I also don't think the big all purpose HTPCs are the way to go. Some of these products include multiple TV tuners, including analog, and standard and high definition digital for over-the-air and QAM. For digital video recorder (DVR) functionality like a Tivo, they have massive amounts of storage space. They are also meant to provide storage for their music and movie libraries. Some have a big VFD display mounted on the front of the HTPC's chassis so you can operate the system without turning on the main display or view status information. It's hard to fit all this functionality and storage into a chassis that looks like other A/V components, let alone keep the interior cool without noisy fans. I would prefer a much simpler, smaller HTPC. Maybe something about the size of Apple's Mac Mini. This HTPC would still have excellent graphics and a fast processor with lots of RAM, but it wouldn't need all the TV tuners or storage space. Instead, you could have a server running something like Windows Home Server or unRaid with lots of hard drives. This could be stored in a closet or basement, so you wouldn't need a fancy expensive chassis. You can also get an HDHomeRun type device instead of all the internal TV tuners. Both the media server and HDHomeRun connect to your home network. You still get all the functionality of a big HTPC, but in a quieter box with a lot smaller foot print.

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