The new Pavilion PCs crank up the pressure on Houston-based Compaq Computer, which lost the top spot in retail to Palo Alto, Calif.-based HP in Feburary. Compaq last week unveiled new Presario PCs, also decorated with colorful translucent panels and other accents.
Both companies hope parents will snatch up these computers in time for the new school year.
The refreshed consumer line, to be unveiled at the PC Expo trade show in New York, also gives additional momentum to AMD, as HP's top Pavilion in retail will incorporate AMD's 1-GHz Athlon processor, not an Intel Pentium III. HP will ship AMD's 1-GHz Athlon processor in new retail systems. Customers looking for a Pavilion with a 1-GHz Pentium III will have to buy it direct from HP's Web site.
Other new models will feature 667-MHz Celeron processors released by Intel today.
"We had the 1-GHz Pentium for sale the last few months," said Tom Anderson, HP's direct consumer business manager. "What we generally do is we look at which one on a system basis sells the most effectively for the least money. And it turns out Athlon has the advantage there, unless you value in Rambus. That's essentially why we're using Athlon."
The Athlon processor has largely defined the top end of the consumer PC business this quarter. Because of a combination of shrewd marketing and manufacturing on AMD's part and a severe processor shortage at Intel, most major computer companies feature Athlon in their most expensive systems and choose Pentium IIIs and Celerons for midpriced and budget systems.
HP initially began adopting Athlon quietly, offering Athlon systems in computers sold only at club stores such as Costco. Since then, HP has more aggressively adopted the chip line.
HP's consumer PC resurgence comes as the company focuses more on value than low cost, a strategy that has proved effective, said PC Data analyst Stephen Baker.
While Compaq battled with Emachines for mind share and market share in the lowest-priced segment--PCs selling for under $600--HP set its sights higher. The company added desirable extras, such as CD-RW drives, costing several hundred dollars more but still priced comfortably for the majority of consumers, Baker said.
A CD-RW, or CD-ReWritable disk, allows people to burn CDs with content such as music or backup data and then record over the same CD again and again.
Still, the company hasn't ignored the bargain bin. Last month, HP retained its overall retail crown and beat Compaq for the first time in the coveted sub-$1,000 PC category. That category accounts for 72 percent of retail sales.
"HP has done well with this approach and also leveraging the brand awareness of peripherals, like their printers," he said.
CD-RW drives, which are high on the list of components customers crave, have been a major factor in HP's success. With today's Pavilion refresh, all but HP's entry-level system feature CD-RW drives. PC Data estimates about 45 percent of PCs bought at retail pack rewritable drives, compared with less than 1 percent a year ago.
"We've found that CD-RW, from the numbers, is something consumers can relate to," Anderson said. "There's (digital) music and simplified backup. We found there is a strong consumer interest in that feature."
Another factor contributing to HP's success, added Baker, has been a lack of mix-ups.
"Compaq has been very good at taking advantage of poor execution on HP's part," Baker said. Although HP closed on Compaq in the past, the company would fumble and "Compaq would grab all those sales and momentum back. The difference has been the last five or six months HP doesn't crap out anymore."
These factors will likely be more important than the splashy color plans of either company. Baker, among other analysts, has noted that the emphasis on industrial design and color has not revolutionized the computer business. Cool colors revived Apple, but they have not transformed the market. The overall effect, moreover, is diluted because everybody has adopted kicky design schemes.
In overall May retail sales--including catalog and online--HP had 36 percent market share vs. Compaq's 31.1 percent, according to PC Data. But in stores, such as Best Buy and CompUSA, HP walloped Compaq with 42.4 percent share vs. 28.9 percent.
In all, there are seven new models, with panels and accents in three colors--blue, krypton green and xenon purple--available on Pavilion 8700 and 9700 series systems. The new Pavilions will be available immediately, with panel kits expected to go on sale around July 6.
Among the new Pavilion PCs:
The 9790C, with a 1-GHz AMD Athlon processor, 128 MB SDRAM, 60GB hard drive, CD-RW drive, 12X-DVD drive, 32MB Nvidia TNT2 Pro card, 10/100 Base-T networking card and 1.5 Mbps Digital Lucent WildWire DSL modem for $2,399. The similarly configured 9780C comes with a 900-MHz Athlon processor for $1,849.
The 8770C, with a 850-MHz Athlon processor, 128 MB SDRAM, a 45GB hard drive, 12X-DVD drive, 10/100 Base-T networking card and 1.5 Mbps Digital Lucent WildWire DSL modem for $1,599.
The 8750C, with a 667-MHz Celeron processor, 64MB of RAM, 30-GB hard drive, CD-RW drive, 48X CD-ROM drive and 10/100 Base-T networking card for $1,049. The 6740C comes without the CD-ROM drive and a smaller hard drive for $749.