Sharper Image: Digital Projectors Pack a Peripherals Punch

Certainly, improved LCDs and networked color printers are hot. And Xerox's new Phaser 6250 is a networked laser-color printer that's getting a lot of buzz. Equipped with a 700-MHz PowerPC processor, it prints 26 pages per minute in color, outputting the first page within 12 seconds.

But what pushes the HP digital projector over the top is innovation that will no doubt carry on into a generation of new products. In fact, the new crop of portable digital projectors is almost akin to the first laptops that had color displays and built-in modems. And at a sub-$3,000 price point for high-end units, suddenly mobile executives don't have to rely on renting them.

"You're seeing a greater presence of these products in the market," says Brendan Sullivan, director of marketing at CDW. That includes high-end products like the mp3130, as well as low-end units, which have recently hit below the $1,000 price point.

Projecting Growth
The market for digital projectors this year has grown 48 percent to $819 million, according to IDC, which forecasts that sales will grow 34 percent to $1.1 billion by 2004. "Overall, the market for digital projectors is doing very well," says IDC analyst Bob O'Donnell. "There's a lot of traction."

Among those that are becoming more reliant on mobile digital projectors are traveling salespeople, consultants and virtually anyone who has to make a presentation. Likewise, they are showing up in corporate conference rooms en masse. There's also a huge market for schools, where digital projectors are replacing the traditional overhead projectors.

"That's a growing industry," says Earl Neville, president of Connection Point Computer Center (CPCC), a Green Bay, Wis.-based VAR. "Lower cost and the desire of most schools to create smart classrooms are making these real hot items."

For its part, HP has offered digital projectors for only about 18 months; in fact, Compaq spearheaded the company's foray into the area. Although the market for digital projectors is just a fraction of the size of the printer market, both play to HP's key strength--presenting information, says Steve Brown, vice president and general manager of HP's Digital Projectors and Imaging Systems unit.

HP's digital projector line has gained momentum within the past six months, during which time the company has seen sales volume triple. Fueling growth is falling price points. A year ago, a high-end digital projector sold for $4,000. Now it's in the $2,500 range.

Yet Brown says these devices are far from reaching commodity status for some time to come. For one thing, many companies that install digital projectors in conference rooms are not merely connecting them to the back of a PC--rather, they are connected to the enterprise network and, as such, need to be integrated, a key opportunity for VARs, Brown says.

"In terms of the projector market, the fact that these products are going to be implemented across the enterprise, I think the VAR channel...can provide great service," he says. "The whole integration and services aspect is a much bigger component of the sale than the hardware itself."

Product Features And VAR Challenges
With the HP mp3130 and its larger sibling, the XP8010, a new smart attachment model allows users to save presentations on CompactFlash or Secure Digital cards and give presentations without a PC. Built-in wired and wireless network support lets organizations manage the devices over the corporate backbone.

Support for XGA, as well as for full-screen NTSC, PAL and HDTV video via S-video inputs, allows presenters to link DVD players, camcorders and VCRs to the projectors. An electronic keystoning feature eliminates the need to manually move the machine to avoid the appearance that the projector is tilting.

While digital projectors promise a growth opportunity for HP, they also will create new challenges. For one, HP will have to address the conflict between the A/V channel and solution-provider channel--two channels the vendor will need to work with to meet demand for its projectors.

VARs like CPCC represent a new partner segment HP is focusing on--the pro A/V channel, says Chris Samper, HP's marketing manager for digital projectors. At the beginning of this year, the A/V channel was the dominant distributor of projectors with a 57 percent share, while computer VARs accounted for 35 percent, says market researcher iSuppli. By year's end, iSuppli has forecast that VARs' share will increase to 38 percent. Getting the more traditional solution providers on board may take some time.

While HP gives San Diego-based CSCI incentives to sell its printers and digital cameras, it has done little to push projectors, says Rich Tear, the solution provider's CEO. "It hasn't been that proactive with digital projectors," he says.

Also, while HP's peripherals historically have attached to one thing--computers--digital projectors will have implications not only on PCs but on a wide variety of audio and video products offered in the entertainment world. That means not just competing with Dell and Epson, but Panasonic and Sony, among others, as well.

"In other product categories, we absolutely drive share toward a preferred partner, [but] we have no preferred go-to partner with digital projectors," says Gary Woods, vice president of product marketing at Insight, a Tempe, Ariz.-based solution provider.