HP is ready to play games

Shows prototypes of gaming technologies

Any lingering image of Hewlett-Packard Co. as a stodgy company was dispelled Wednesday night in San Francisco as the company cried "Game on" in its bid for a piece of the online gaming industry.

The company's HP Labs research center is developing technology that could enable next-generation personal computers to play interactive video games designed for the broadband era. HP thinks it can compete against popular console-style game systems such as Microsoft Corp.'s Xbox, Sony Corp.'s PlayStation and Nintendo Co. Ltd.'s Wii.

At a press event that drew some of the company's technology partners, HP officials showed off prototypes of gaming technologies, including gaming PCs from VoodooPC, which HP acquired in the fourth quarter of 2006. The gaming unit within HP's Technology Solutions Group is called Game On.

The prototypes include computers with curved screens that let someone playing a race car game can see the track he's driving on ahead and to the sides, and a touch-screen computer built into a coffee table so players can sit on all sides. HP also played a video in which a teenage boy walks through a big city with his handheld game player. He points the device at a portion of the city's skyline, the device scans the outline of the buildings in view and creates a game scene from that image.

While its technology looks impressive, HP has a steep hill to climb. Sales of gaming consoles grew 33% in 2006, while sales of gaming PCs grew by only 1%, according to the retail sales tracking firm NPD Group Inc. HP doesn't expect consumers to camp outside retail stores overnight to buy an HP gaming PC, as they did for the Xbox 360 and PlayStation 3, but company officials said there are promising signs of market potential.

Sales of gaming software that runs on PCs reached $6 billion globally in 2006 and are forecast to hit $12 billion by 2010, said Rick Wickham, director of Games for Windows at Microsoft Corp., citing figures from IDC.

Rahul Sood, chief technology officer at HP's global gaming business unit, who came over from VoodooPC, sees HP offering a premium line of gaming PCs priced higher than its current line of HP and Compaq brand PCs, but lower than VoodooPC's custom-made models, which can sell for $8,000.

Asked specifically if HP plans to soon introduce a line of PCs like that, Shane Robison, executive vice president and HP's chief strategy technology officer, said, "I am not allowed to go there."

HP is not the first PC maker to try to branch out into high-end gaming PCs. Dell Inc. acquired Alienware Corp. in March 2006, for an undisclosed amount. But HP appears to be taking advantage of its new relationship with VoodooPC more quickly.

HP's move into gaming could be a "game-changing" move, said Rob Enderle, an analyst at technology research firm The Enderle Group. HP could try selling high-margin gaming PCs to escape from the low-margin PC market it competes in with every other PC maker. But that could be a risky move.

"The buyer may say they don't want one, and that is the risk when you make a game-changer. You make a guess at where the market is going, and you get there first," Enderle said. "If you guess wrong, you're there all by yourself."

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