HP to stop reselling iPod music player - East Valley Tribune: Business

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HP to stop reselling iPod music player

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Posted: Friday, July 29, 2005 2:09 pm

SAN JOSE, Calif. - Hewlett-Packard Co. decided Friday to stop reselling Apple Computer Inc.'s popular iPod digital music players in September, ending a high-profile deal that combined two of Silicon Valley's best-known companies.

Both companies confirmed the decision to end the arrangement, which was unveiled with great fanfare in January 2004. Currently, HP-branded iPods make up about 5 percent of the popular music player's total sales.

"HP has decided that reselling iPods does not fit within the company's current digital entertainment strategy," Apple spokeswoman Natalie Kerris said. "As a result, HP plans to stop reselling iPods by end of this September."

Ross Camp, a spokesman for HP, said all warranties will continue to be honored. HP will keep offering other consumer electronics, such as entertainment computers and televisions, Camp said, refusing comment on whether HP will offer its own music player.

"HP is constantly evaluating how we can make the most of our digital entertainment experience for consumers," he said.

The decision ends one of former HP chief executive Carly Fiorina's biggest announcements before her ouster earlier this year. Since then, new CEO Mark Hurd has embarked on a major reorganization that includes 14,500 job cuts and the undoing of some of Fiorina's initiatives.

Some analysts have questioned HP's decision to partner with Apple in the first place. HP, which heavily advertises its own inventiveness, essentially was rebranding another company's technology.

Camp said the decision was made by senior leaders in HP's digital entertainment team.

"As CEO, Mark Hurd obviously sets the tone and visions for the company," he said. "His management team executes against that vision as accountable business managers."

As part of the agreement, HP also installed Apple's iTunes music jukebox program in its desktop and notebook computers. Apple said the software bundling would continue even though HP won't be reselling iPods.

Apple first launched the iPod in 2001 and has since sold more than 20 million of the diminutive devices. Kerris could not immediately comment on the impact of HP's decision to Apple's results. HP's Camp declined to comment altogether.

Shares of Apple fell $1.16, or 2.7 percent, to $42.64 in Friday afternoon trading on the Nasdaq Stock Market. HP shares rose 19 cents, to $24.68, on the New York Stock Exchange.

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