TVs and computers are practically cousins, right? Hewlett-Packard (NYSE:HPQ) certainly seems to think so -- or if not cousins, perhaps a successful blind date. HP, a household name in the computer industry, is bringing 10 new digital television models to market this fall.
These new models are HP's attempt to catch up with competitors like Motley Fool Stock Advisorpick Dell (NASDAQ:DELL) in the digital television market. HP wants to increase its market share while using the digital displays to complement and showcase its other offerings in fields like networking and imaging.
HP's TVs aren't your usual digital displays. Among other features, they'll wirelessly link to PCs, letting users view photos or listen to music downloads from the comfort of their couches. The new TVs use cutting-edge technology to automatically adjust the image quality according to the amount of light in the room. HP is also using custom image-processing software to make the picture twice as sharp without increasing the number of pixels displayed -- a technology called "wobulation." The new screens should allow the company to manufacture high-quality TVs at lower production costs.
Earlier this summer, HP initiated restructuring efforts by downsizing its workforce and announcing that it would refocus on its core businesses. Mere months later, HP's new TV initiatives seem to be expanding exactly how the company defines "core business." Will these new products mesh with HP's other businesses, or will the expansion into TV negate the company's attempts to simplify?
At first glance, analysts might view the introduction of more TVs into a mature market as a bad move. But look again at the company's operating segments, and you'll see that these new computer-connected TVs mesh nicely with HP's imaging, printing, and computer segments. It's telling that management seems to be committed to the TV space; in HP's case, management generally knows best.
Does the company have what it takes to compete against Sony (NYSE:SNE), Dell, and Epson, which are already established in the digital television business? Lower manufacturing costs should lower prices for consumers as well -- but will those prices be low enough? Can HP make televisions that are inexpensive enough to compete on both price and features? If HP can differentiate itself from the competition in both of those respects, the opportunity for the company and its shareholders is ripe.
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Fool contributor Jennifer Schonberger owns shares in Hewlett-Packard but holds no financial position in any other companies mentioned. The Fool has a disclosure policy.
