The consumer product is expected to combine a personal computer with a large television monitor and will probably also include consumer electronics-type features such as an advanced audio system. An optional DVD player could let users run movies and interactive content.
The product is expected to be announced next week, according to industry sources.
"I think you'll see [a PC with] surround-sound audio, a TV tuner, and advanced TV program scheduling. It will probably be a cut above the [Gateway] Desintation," said Van Baker, an analyst at Dataquest.
RCA parent Thomson Electronics and Compaq announced last year that they were planning on jointly developing a PC-TV hybrid. One possible outcome of the collaboration, company executives said at that time, was the incorporation of RCA's Digital Satellite System technology to download video and audio directly from satellites using MPEG-2 technology.
Products developed to these "PC Theater" specifications will have television receivers, Web access, and DVD drives as well as large screens, like TVs, and surround-sound audio. The PC would act as the intelligent hub of a complete home entertainment system and could control devices such as VCRs, CD jukeboxes, and telephony equipment from a single system interface.
Gateway 2000, which pioneered the big-screen PC-TV market, said it welcomes the competition. "Compaq's entrance into this market will help us. It would legitimize our concept at the same time as educating consumers [about convergence products]," a product manager at Gateway 2000 said.
Gateway's Destination PC TV features a 31-inch VGA monitor, 166- or 200-MHz Pentium processors with an MMX multimedia or a 200-MHz Pentium Pro chip, and an optional surround-sound system.
Gateway sold the Destination for several months at retailers such as CompUSA but recently returned to its usual direct-sales model now that consumers are more familiar with the product.
Destination has enjoyed moderate success, particularly in business and education markets where it is used for presentations. While the system was originally intended for the consumer market too, the base price of $2,999 proved too high for most home users.