Printer and computer giant Hewlett Packard wants its name on your next TV set - or maybe the one after that. That may sound ambitious, if not laughable, for a company that obtained just $30M in revenue from TV sales last year in what was a $17B market in the U.S.

Ken Werner
Senior Analyst and Editor
of MDTV Retailer

But let’s not laugh just yet. Re-invigorated HP is not only pressuring arch-rival Dell in direct-to-consumer PC sales, but has quietly become the leading supplier of technology products to the country’s largest electronics stores, according to market research firm NPD Techworld. That’s not television for the most part, but it is consumer electronics, and it was an $81B market in 2005. HP says it took over 13% of it.

(Sony came in second with 11.3%; Panasonic was third with 4.3%.)

Although HP’s consumer PC sales have recently been growing faster than Dell’s, substantial growth in the consumer PC business is bound to be an ongoing struggle, with Dell recently initiating a new round of substantial price cuts - which resulted in a well-publicized shortfall in 1Q earnings compared to earlier advice. So where does a company like HP go for its next spurt of growth? It goes to the convergence of the once-separate categories of information technology and home entertainment.

"The overall TV experience is changing," said Jan-Luc Blakborn, HP’s director of digital entertainment. "People are spending more on TVs because of the kind of experiences they want with what they watch, and with their videos and photos. It’s all IT-driven, and we want to be in that market."

NPD’s Stephen Baker agrees. "When you think of it, there really are two companies with the right amount of technology to take a bigger percentage of the retail market: HP and Sony." And HP knows it needs to broaden its reach into these other retail areas."

And that’s what HP has started to do. It has installed Snapfish digital photo processing kiosks at retailers that include Costco and Wal-Mart, and - as reported in Insight Media’s HDTV Retailer last month ­- has started rolling out five different TV models for sale through Best Buy. By late summer, HP’s Blakborn said, three LCD and two plasma models will be on sale throughout the Best Buy chain. "This is the next step in our TV strategy to place HP on a national stage." Prior to this announcement, HP’s TV line had only been sold through specialty regional retailers, and on-line, according to TWICE.

Later in the summer, HP will make the IT-CE synergy more obvious when it ships models to Best Buy that include Media Smart. This technology will allow a consumer to connect his TV to a home computer network and access movies, music, and photos stored on the network through his TV. Of course, HP isn’t the only company to see gold in these media network hills, but it has deep pockets and a new focus.