HP Goes Hollywood with Warner Bros., DreamWorks

Saying it wants to help advance the "digital revolution" in the entertainment industry, Hewlett-Packard (NYSE: HPQ) has announced alliances with DreamWorks and Warner Brothers.

The deals call for HP to help the studios create and distribute digital content. The company made the announcements at the National Association of Broadcasters conference in Las Vegas.

"The business model that has guided this industry for nearly a century is changing radically," HP CEO Carly Fiorina said of the entertainment world. "Content is still and will always be king; however, thousands of new storytelling experiences, applications and services are just around the corner."

Sounds Familiar

The deals echo another alliance forged earlier this year between Microsoft (Nasdaq: MSFT) and Disney. According to terms of that agreement, Microsoft will help Disney put its vast store of older copyrighted work as well as future content onto the Web, using its digital rights management software and other tools to ensure the content does not suffer widespread piracy.

Movie studios have been among the most reticent companies to embrace the Internet as a delivery channel, mostly out of fear that making content available digitally would expose it to widespread pilfering and copying, damaging the industry's ability to make money.

To overcome this reluctance, Fiorina pitched digital opportunities to broadcast executives with a focus they could clearly understand: the bottom line. "There is money to be made just as there is money to be saved -- if this industry embraces the change and the opportunity the digital revolution presents," she said.

Toe-Dipping

IDC analyst Susan Kevorkian told the E-Commerce Times that studios finally are starting to make deals that clear the way for widespread digital distribution.

"The studios have no doubt spotted the opportunities that exist, but they also are worried about the drawbacks," Kevorkian said. "As more studios start to feel confident in moving into the space, the pace at which content becomes available will accelerate."

That will be welcome news to the slew of tech companies that have invested heavily in developing products to make the computer as much a living room fixture as a piece of office equipment.

Almost all major technology companies have targeted some portion of entertainment delivery channels as a way of branching out from traditional computing. For example, Microsoft's studio linkup follows its earlier efforts to build portable multimedia players, and Dell has made entertainment a major part of its product lineup.

HP also has launched a partnership with Starbucks that enables customers of the coffeeshops to use HP technology to create their own music compact discs.

Platform Building

The latest HP deals involve two different initiatives.

In the DreamWorks agreement, HP said it is providing on-demand computing power, allowing DreamWorks to tap into HP's massive server farm when it needs additional computing resources. That technology is being harnessed as the studio puts the finishing touches on Shrek 2, which is set to hit theaters this summer.

With Warner Brothers, HP is developing a movie-rendering platform that will enable the studio to move both new and older films into digital format more readily. HP has dubbed the effort the Digital Media Platform -- an open, standards-based platform designed to work with existing moviemaking technology.

HP said the software platform will "simplify and reduce the cost of content production, distribution and consumption."

Poised for Success?

Enderle Group principal analyst Rob Enderle said HP believes it has the solutions to enable it to capture and control the entertainment production industry, a place where it is better poised to compete than Dell or IBM (NYSE: IBM).

"This is about owning a segment for HP," he said in an interview with the E-Commerce Times. "With IBM shifting resources away from corporate initiatives and back to the divisions, and Dell's lack of depth, HP feels they can move more effectively in these complex emerging markets."

Enderle added that the nature of HP's efforts will make it harder for competitors to dethrone the company. "They are selling infrastructure, which is vastly more difficult to displace than servers or PCs, and then tying in their platforms to this infrastructure," he said. "If successful, they will own this segment, and as this segment changes and grows, HP should receive the greatest benefit."

Busy Day

Also on Monday, HP formally launched its first server line based on AMD's (NYSE: AMD) Opteron processors. The company made available a new Proliant DL6585 Server, which sells for US$8,299, and a top-end ProLiant DL145 server with a price tag of $67,829.

The machines represent the fruition of an announcement that caused a stir earlier this year, when HP said it would release a line of AMD-fueled servers despite its long-running alliance with chipmaker Intel (Nasdaq: INTC).