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HP fills out its media PCs

The PC maker debuts new digital media-ready systems, while sources said Microsoft is testing its next-generation software.

Hewlett-Packard on Monday bulked up its line of Media Center PCs, adding two new models with more storage capacity and beefier graphics.

The new HP PCs run Windows XP Media Center Edition, a hybrid of Microsoft's flagship operating system. In related news, sources said Microsoft is readying a new version of its software, code-named Harmony, for release later this year.

Windows Media Center adds to Windows a second interface for accessing digital media features, such as music, photos and DVD movies. Consumers also can watch and record TV programs to the computer hard drive using digital video recording (DVR) features that are similar to those found in systems from TiVo and other companies.

HP Media Center PCs will anchor the company's effort to be the premium brand going after the same multimedia customers as Apple Computer and Sony. The Palo Alto, Calif.-based company less than two weeks ago announced this effort, in which it has repositioned its HP and Compaq consumer PC brands. The No. 1 PC maker predicts Media Center PCs will make up 10 percent to 20 percent of PCs sold by this time next year.

"If you're talking about consumer segment only, that's a very credible prediction," said IDC analyst Roger Kay. "Even though the systems are fairly high priced, they deliver on the convergence experience between PCs and entertainment."

Media Center PCs typically appeal to middle- to upper-middle-class consumers who are looking for a second or third PC, Kay said.

Kay estimates that HP sold about 50,000 Media Center PCs between their end-of-October release and the year's end.

"HP sold out all of its Media Center product in the fourth quarter," Kay said. "But it did have a conservative build. Because of the threat of war and the weak economy, they built conservatively, only to find they didn't have enough. They could have doubled their numbers if they had the product."

HP has priced the new Media Center 864n at $1,699, the same as the older 873n, but doubled its graphics memory and increased its hard drive capacity by about 25 percent. The new model features a 2.66GHz Pentium 4 processor, 512MB of double-data rate (DDR) SDRAM, a DVD recording drive, a 48x CD-RW drive, a 160GB hard drive, a 128MB Nvidia GeForce4 MX 440 graphics card, a Creative Audigy sound card, a 10/100 network adapter, a 56kbps modem, five USB 2.0 ports, a single FireWire port, a five-in-one media reader and 200-watt Klipsch ProMedia 2.1 speakers.

HP's 854n model, which sells for $300 less than the 864n, comes with a 2.53GHz processor, 120GB hard drive and no speakers. Both systems also come with the latest version of Sonic Solutions' MyDVD software. In January, Sonic enhanced MyDVD so that it could burn TV programs recorded on Media Center PCs to DVDs. This spring, the company also plans to offer a new program, PrimeTime, which adds DVD burning directly to the Windows Media Center interface.

The Media Center 854n is scheduled to go on sale at major computer retailers on March 16, and the 864n is due about a week later.

New software on tap
While HP puts the finishing touches on the current generation of Media Center PCs, Microsoft is readying a new version of its software.

About two weeks ago, select beta testers received HP PCs running the new Harmony version of Media Center, sources said.

The Harmony release will largely fix current glitches in the operating system related to audio and video performance. Some of those glitches include stability problems, poor TV quality and dropped frames. Microsoft also is looking at new features, such as FM radio, which is available with Harmony Beta 1, according to sources familiar with the test version.

Beta 2 of Harmony is scheduled to be distributed in May, according to sources. The final release of the software is slated for the third quarter. Microsoft also plans to expand to Europe and Asia the number of countries where Media Center PCs will be available.

Microsoft also is considering other changes to Media Center, but it is uncertain whether these will be included in the Harmony release, said sources.

The company is looking at how best to offer Smart Displays for Media Center PCs. Microsoft's Smart Display is a wireless monitor running a version of the Windows CE operating system. The monitor can be removed from the PC to access the computer from anywhere in a house. Right now, only one monitor can be connected to a PC at a time. Microsoft wants to be able to offer Smart Display support for, say, Web surfing, while letting someone else using the Media Center to watch TV, said sources.

Redmond, Wash.-based Microsoft also plans to add Media2Go support to Media Center PCs. Media2Go portable devices, which offer video and other entertainment features on the go, already use the same interface as Windows Media Center. Media2Go devices are expected to reach store shelves by the holidays.

Microsoft declined to comment about Harmony.

Major PC makers selling Media Center PCs are expected to offer Harmony when it is officially released. Besides HP, North American Media Center manufacturers include Alienware, Gateway, iBuyPower, Mind Computer Products, Seanix Technology, Supercom Canada, Tagar Systems and Toshiba.

The majority of manufacturers offer Windows Media Center on desktop PCs, but Alienware and Toshiba will offer notebooks running the XP hybrid.