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HP sings swan-song for iPod resale deal
'Buy your Apple players elsewhere in future'

By Ina Fried

Published: Monday 01 August 2005

HP is ending a high-profile deal to resell Apple's iPod.

The deal, unveiled with much fanfare at the January 2004 Consumer Electronics Show, took awhile to get going, with HP taking seven months to announce its first product.

A HP spokesman said on Friday: "We do remain committed to our digital-entertainment strategy. We decided that reselling the iPod does not fit within that strategy."

Although HP plans to stop selling Apple's players, it will take some time for that to happen. The computer maker recently announced a new line-up of HP-branded iPods. Camp said HP plans to continue reselling the music players until the end of September, when it expects to have sold its inventory of iPods, iPod Minis and iPod Shuffles.

Camp said that HP's "current plan" is to continue including Apple's iTunes software on its desktop and notebook PCs, as it has done since last year.

Under the terms of HP's deal with Apple, the computer maker cannot develop or market a rival digital music player to the iPod until August 2006.

Camp said HP plans to continue selling other digital entertainment products such as its line-up of televisions and Media Center PCs.

Apple also confirmed the unwinding of the deal, noting in a statement: "HP's iPod sales have accounted for an average of five per cent of all iPods sold since the deal was originally struck between the companies in January 2004."

Last quarter, HP's iPod accounted for eight per cent of sales, Apple said during its recent profits conference call. That was up from two or three per cent in the prior quarter.

At times, HP had an iPod line-up that matched Apple's in terms of pricing and models. At other times, though, the HP models lagged behind those available from Apple.

For example, there was a significant period of time during which Apple had colour-screen models and HP did not. Also, until very recently, HP only sold the white iPod models and not the iPod Mini or flash-based iPod Shuffle. HP announced in June that it would start selling a Mini model and said earlier this month it would begin offering the Shuffle.

Apple noted that HP is responsible for supporting the iPods it sells: "As with all HP products, HP will support the Apple iPod from HP consistent with the terms of HP's limited warranty and award-winning service."

Word of HP's move was initially reported by the Wall Street Journal.

Ina Fried writes for CNET NEws.com