SAN FRANCISCO – Computer and printer maker Hewlett-Packard Co. (HPQ) said Thursday it will soon sell a digital music player based on Apple Computer Inc.'s (AAPL) wildly popular iPod (search) player, and it announced plans for a home "entertainment hub."
Beginning this spring, the company said it would start delivering the HP-branded player, as well as make Apple's popular and easy-to-use iTunes digital music jukebox and online music store available to HP customers.
HP said that as part of an agreement with Apple announced at the Consumer Electronics Show (search) in Las Vegas, its consumer personal computers and notebook PCs will come preinstalled with iTunes and desktop icons to point users directly to the iTunes Music Store (search).
"This really means that Hewlett-Packard is going to promote an Apple product and an Apple platform," said Phil Leigh, senior analyst with market research firm Inside Digital Media. "When has a major PC manufacturer promoted a software platform that was not Microsoft?"
The news propelled Apple shares 4.7 percent higher.
Apple has already sold more than 2 million iPod players, and earlier this week it announced the iPod Mini, a smaller and slightly cheaper version of its regular iPod player. Its online music store boasts a library of more than 500,000 songs and has sold consumers a total of more than 30 million songs.
"Apple's goal is to get iPods and iTunes into the hands of every music lover around the world," Apple Chief Executive Steve Jobs (search) said in a statement. Apple executives have said they believe that the iTunes music store would ultimately drive more sales of the high-margin iPods.
Phil Schiller, head of worldwide marketing for Apple, told Reuters that Apple would manufacture the HP players and sell them to HP, which would in turn resell them to customers.
"We're taking a big step today to further the iPod," Schiller said.
Schiller also said the link-up between the two companies could prevent a Balkanization of the industry, which is now marked by at least two major competing file formats, AAC, which Apple and some others use, and Microsoft Corp.'s (MSFT) WMA, or Windows Media Audio format.
"This gives Apple a shot in the arm to potentially become the standard," Leigh said. "It's a blow against WMA."
HP Chairman and Chief Executive Carly Fiorina (search) said the company had explored other alternatives for a digital player and jukebox but ultimately "concluded Apple's iPod music player and iTunes music service were the best by far."
HP said that the player would be "priced competitively to other digital music players." But that allows for a broad range, with players costing from less than $100 to as much as $499 for Apple's top-of-the-line iPod.
But the HP players will likely be priced near Apple's iPods, which cost $249 to $499, Leigh said, to avoid cannibalizing Apple's own iPod sales.
HP also announced plans to start selling this fall what it calls an "entertainment hub" that will include a single central storage device, as well as a distribution and access point for all of a household's music, photos, videos and movies.
At the show, HP previewed its widely expected 30-inch and 42-inch plasma digital displays. The company also said it plans to sell a range of digital projectors for use in home theater systems, starting in the fall.
Shares of HP, based in Palo Alto, California, rose $1.22, or 5.2 percent, to $24.58 in afternoon trading on the New York Stock Exchange after Goldman Sachs analyst Laura Conigliaro issued a note to clients saying she believed that HP could beat analysts' expectations because of a holiday season that was at least in line with expectations, and probably better.
Shares of Apple, based in Cupertino, California, rose $1.03 to $23.62 on Nasdaq.