CompUSA and Best Buy will sell the new HP Pavilion notebook. Although the company launched its Omnibook corporate laptop six years ago, this is HP's first foray into the retail notebook sector.
HP will likely face the toughest competition from Compaq Computer and Toshiba, which have dominated the retail notebook market for the last few years. In May, Toshiba and Compaq took almost 70 percent of the market, according to Infobeads, which leaves little room for HP.
"This move will round out HP's notebook product lineup, which has been exclusively focused on large businesses up until now," said Matt Sargent, an Infobeads analyst, in a report, adding that notebook sales to home users will increase by one third in 2000, compared to the 16 percent growth expected for all notebook sales in the U.S.
HP is targeting the small- and medium-sized business market with the Pavilion, as well as the education and individual consumer market, the company said. Borrowing the Pavilion brand name from its successful line of desktop computers is a smart move, Sargent noted, which was previously successful for Compaq when it launched its Presario notebooks.
This strategy "allows customers to more easily identify with notebooks as the brand name of Pavilion is much stronger than the OmniBook brand name which HP uses for its corporate notebooks," Sargent said, but cautioning that "HP will need to bring more than a strong brand name to the table to make this venture work."
HP is targeting the small- and medium-sized business market with the Pavilion, as well as the education and individual consumer market, the company said.
The new products are midrange, both in terms of price and technology. Based on Intel's 433-MHz Celeron processor, the systems do not yet offer DVD, nor do they offer notably large hard drives or memory capacity, or other bells and whistles of the highest-end models from competitors. Starting at $1,399, the new Pavilion notebooks don't break any price barriers, either.
But the midrange market is exactly where HP wants to be with its first products, according to Bob Nitzberg, the manager of the retail notebook group at HP. With the new Pavilions, the company has identified what it believes is the highest-volume market segment, Nitzberg said.
"There are higher-end systems out there, but there's not a lot of volume behind them in retail," he said. "It's important to be where volume is," especially as HP begins to manage its inventory and relationships with suppliers and distributors.
In fact, the company is purposely starting slow, he said. "This is our first launch into retail. We're starting with a fairly limited distribution, starting out very slowly, so we can make sure we have adequate levels of support."
At the same time IBM and Dell have unveiled notebook computers in fashion color cases, HP is sticking to a more classic look. "We've got the best industrial design, which is very cool and very stylish without being terribly fashionable," Nitzberg said. "It has the legs to last several years."