HP Exits Media Center Business, Drops DEC Line

HP is pulling out of the Digital Entertainment Center (DEC) business. The company that pioneered the living-room form factor for Media Center Edition (MCE) PCs has decided to drop the line.

The company instead will focus its energy on MediaSmart, the new brand of TVs with digital media adapters built in -- not Microsoft Media Center Extenders that link Media Centers with remote TVs, but HP's own solution for distributing photos, music, video and other content (including Web-based) to the TV.

HP channel development manager Doug Robert, who was (in my view, anyway) the main driver of DEC in the custom electronics channel, says, "This not a statement about Media Center PCs. It doesn't mean Media Center isn't going to be successful. It's just that we're discontinuing development."

He adds, "Even at big companies, there are resource constraints."

Goodbye DEC

I'm not too surprised that HP is abandoning DEC, which it launched in conjunction with the first generation of Microsoft's MCE platform. HP took a big risk investing so heavily in the platform, and it was by far the biggest seller of MCE products, particularly ones that looked like traditional A/V components.

That was Microsoft's original plan -- to "own" the living room by way of CE-looking Media Center PCs. But besides HP, no one back then was really making MCEs in an A/V form factor.

At CES in January of this year, former Apple CEO John Sculley chided Microsoft because the company's "first attempt in the living room was: Buy a $2,000 computer that's wrapped in a skin."

At the Windows Hardware Engineering Conference (WinHEC) last year, Will Poole, senior vice president, Microsoft Market Expansion Group, boasted that 10 million copies of MCE had been sold.

Poole didn't say how many of these PCs were used as, well, Media Center PCs, rather than just productivity PCs that happened to have the MCE software loaded into it. Neither did he mention how many of these MCEs came with TV tuner cards, or were in fact being utilized for any Media Center functions.

Media Center PCs designed to be used as Media Center PCs were difficult to set up and painful to support, with all the junkware pre-loaded and special settings that had to be checked for little things like avoiding system hibernation and turning off the beeps that sound at very inopportune times.

The PCs by and large were too loud to sit next to the TV, integration with TVs and receivers could be unwieldy, and the Digital Rights Management (DRM) constraints were stifling (even if that wasn't Microsoft's fault).

I use the past tense, but even with all of the improvements under Vista, these limitations still remain for off-the-shelf products.

We don't see all of these problems (some, but not all) with MCEs that are especially built to be used as Media Center PCs. To be sure, there are plenty of niche players making nice products that solve most of MCE's inherent limitations. But they're not HP or Dell or Gateway or Alienware for that matter. In other words, they're not mass-market products.

Furthermore, I've never heard of a single mass-market merchant that has had much success with Media Centers PCs sold as Media Centers for actual entertainment. This will change, especially with continued improvements in Vista. I'm sure HP knows that, but you can't blame them for being a little bit jaded. They fought a good fight.

HP in the Custom Channel

Back in 2005, HP began to "get" that the mass market might not drive the adoption for Media Center PCs. How could regular consumers get it, when mass merchants didn't understand it?

So a small handful of people in HP thought it might be a good idea, rightly, to exploit the 15,000ish companies that install home technology for a living -- the custom installation channel. These pros could learn the product well enough to install it reliably in home after home, and support it afterwards. They could also be a significant conduit for getting feedback to the manufacturer quickly and effectively.

HP went to industry trade shows, spoke with countless custom integrators, and finally, late in 2005, began to put the infrastructure in place to cater to this channel.

HP latched on to Exceptional Innovation, developer of Lifeware home automation software for MCE, and the undisputed Media Center juggernaut in the custom channel. The two companies did some serious cross-marketing, like the enormous NextGen homes in the parking lot of the Consumer Electronics Show -- including two homes this year. The past few Electronic House Expos (although not the most recent EHX Spring) featured large Exceptional Innovations booths plastered with HP logos and filled with HP products.

Both companies worked closely together on the past four Media Center Boot Camps at EHX.

HP never had an exclusive arrangement with EI, but the two companies were so tight that industry players were certain one had acquired the other (which was which, no one could figure).