Why Hewlett-Packard took Apple’s iPod shortcut

“Last summer, Hewlett-Packard Co. found itself in an awkward position for a premier computer company: It hadn’t fielded a single candidate in the fast-growing market of digital music players. HP had gone through numerous music player designs and had built several prototypes to show to focus groups around the country. But people kept saying they preferred the celebrated iPod from Apple Computer Inc.,” Terril Yue Jones reports for the Los Angeles Times.

Jones reports, “Tom Anderson, HP’s vice president of marketing for consumer PCs, couldn’t say he was surprised. The self-proclaimed gadget freak had snapped up an iPod soon after Apple introduced the sleek white devices in October 2001, loading it with classical music and tunes from the Beatles, Rolling Stones and Bob Dylan. He knew the iPod was the gold standard. ‘Apple did everything right,’ Anderson said. Everything HP did, he added, ‘looked like a compromise.'”

“So HP switched gears. It dropped an industry bombshell at the International Consumer Electronics Show in Las Vegas last month when it announced it would sell the iPod under the HP brand name,” Jones reports. “Apple sold 1.45 million iPods last year, according to IDC, and the arrival of “hPods” will instantly triple or quadruple sales of the device, technology analyst Rob Enderle predicts. ‘This deal explodes their potential,’ he said.”

Full article here.

16 Comments

  1. “The arrival of “hPods” will instantly triple or quadruple sales of the device…”

    Huh? How would it triple or quadruple sales of an already cross-platform device???

    “…technology analyst Rob Enderle predicts.”

    Oh, this tool again. Never mind.

    It’ll be interesting to see the actual breakdown of the iPod/hPod sales, but if there’s a big spike in Pod sales, it will be due to the iPod becoming ubiquitous and mature, not because of HP’s clone.

  2. Oh well, now Enderle says it’s a good move I can breathe easy.

    For a moment there, I was thinking my choice of an iPod was wrong – but now HP are there lending credibility to my purchasing decision.

    Your assignment for the next 24 hours:

    Rob Enderle: analyst or snake-oil salesman, discuss.

  3. Tool-boy Rob is anxious to get on the bandwagon, now? But Tool-boy, iPod won’t play WMA. Tool-boy, you’ll have to use iTMS and iTunes to be able to use the iPod.

    Poor Tool-boy. Stuck having to say something nice about someone who isn’t paying for it. Is there anything sadder than a prostitute who turns a trick but doesn’t get paid?

  4. This deal will probably triple (x)Pod sales simply because of HP’s sales & distribution network. Apple has a historically small and crappy distribution network. The only people that really do a good job of selling Apple products is Apple. Have you been to CompUSA lately. Their merchandising is horrible; their Apple merchandising is better than the rest of the store but still isn’t very good. HP on the other hand can sell (x)Pods at almost any electronic/computer retailer in the country. It’s a matter of how easy is it to get access to the products and who can help with the marketing of those products.

    At some point pure herd statistics come into play due to marketshare. People tend to buy what other people around them have. If the (x)Pod marketshare climbs to ~40% to ~50% it creates a type of windfall marketing opportunity where everyone just calls portable music players iPods, whether they are made by Apple or not (i.e. “Can you get me a Coke from the store?” “Sure, what kind would you like.”) You just have to make sure that the distribution is there to handle the demand. People won’t purchase products that they can’t get access to. This has been a problem with the Mac and I’m hoping has learned from the Mac distribution problems. Don’t license the software, OEM the hardware.

  5. Ender-ho seems to need a lesson in basic economics. Apple has over 60% of the HD-based market right now. For the sake of argument, lets say the market is 100 people. So 62 people are already buying iPods. So, according to Ender-ho, when the hPod comes on the market, suddenly iPods are going to be sold to 180 or 200 people? Clearly, for this to work the market has to double based solely on the arrival of the hPod (B/C even if the market was 200 (doubled) before the hPod came out, the iPod would claim about 124 of that based on current market share). Otherwise, the market is not big enough, since the iPod already claims over 60%.

    SO, apparently Ender-ho thinks the current market for HD-based players is going to double or triple, presumably because people are clamoring for an HP iPod.

    OK, I didn’t do the best job explaining my point, but to me, it just doesn’t seem logically possible. Not that it is surprising, considering the source.

  6. Rock- while it is true that HP has a wider network, you can’t compare Apple’s Mac network to their iPod network. Circuit City, Best Buy, Target, Crutchfield. None of them sell Macs, they all sell iPods. Clearly, HP will improve the distribution, but most major electronics stores (at least the ones that sell HD MP3 players) already have iPods.

    I don’t know what the iPod’s market share is overall, but it says in the article it is already over 60% of the HD-based MP3 market.

  7. In reference to the previous article about MS, Rio, and all the other little crying bitches in the industry, let me highlight a quote. “…will instantly triple or quadruple sales of the device…”

    Now that we have the opinion of a PC loving analyst on the table, tell us again why Apple should even blink when you open your mouths.

  8. HP chose the iPod because they figured out just how difficult it was to create from scratch an online music store that is realy functional. Dell can’t write software, so they made their predictable choice. Now ask Walmart and Coca-cola how difficult it is to create an intuitive online
    music store. Best example…where is Micro$in’s online store??…ha…found out it’s much more difficult than a word processor, a database/calculator, a 2D presentation, and a still cheesy after version 6 IE web browser that got tromped by a beta Safari.

  9. HP’s move was very smart and their decision will bring them the biggest and quickest gains. If you can’t lick ’em, then join ’em. In this case, this really makes sense because Apple has such an edge over everything else. This is a win/win situation for both companies. Others will eventually follow suit. Like Stevie boy said, everything is moving towards the cell phone and todays rumor of a iPod built into a phone makes sense. Apple licenses the technology, and the phone companies do what they do best also. Another future win/win as long as Apple has some control of quality control.

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