CES 2015: Has HP Created a New Category of PC?

By Markets Fool.com

Microsoft opened a door for its partners when it reduced OEM pricing on Windows 8 and Hewlett-Packard walked right through it.

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Since the holiday season, HP has been a leader in creating low-cost PC solutions with its Stream laptops which start at under $200 with a free year of Office included. At the 2015 Consumer Electronics Show in Las Vegas, the company took things a step further by announcing two new desktops -- one under $180 -- that not only meet a price point need but also offer an elegant form factor.

With these two new devices, HP has given Microsoft a Windows product lineup that equals or betters Google's on price. It can also be argued that by the two new desktop machines have a look that's sleek like Apple's Mac Mini -- another thing PCs have not been traditionally known for.

In just a few months, HP has rolled out a budget-conscious product line that may not pack a ton of processing power or memory at the low end of the product line, but offers enough to give many users a decent experience.

The HP Stream Mini runs Windows 8 and costs under $180. Source: HP

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What are the new devices?

Basically, HP has delivered the desktop answer to its Stream laptops, which were popular enough over the holiday season that the 11-inch model sold out in many of Microsoft's retail stores. The laptop line consists of the sub-$200 11-inch model, a slightly pricier, otherwise identical 13-inch laptop, and a more expensive "Signature" edition, which has higher specs. The company also has a $99 7-inch Windows 8 Stream tablet and a slightly more expensive 8-inch version (I own one of those as well).

The cheapest HP Stream laptop was displayed prominently in Microsoft's retail stores.. Source: author.

The desktop offering follows a similar model. First, there is the $179.99 HP Stream Mini Desktop, which has a 1.4GHz Intel Celeron processor, 2GB of RAM, and a 32GB solid-state drive. Because of the small amount of on-board storage, the desktop comes with 200 GB of Microsoft OneDrive Storage for two years.

At $319.99, the HP Pavilion Mini Desktop includes an Intel Pentium 3558U processor, 4 GB of RAM, and a 500 GB hard disk drive.

Both machines offer a bevy of ports, including twin DisplayPort and HDMI sockets (so you can display content on multiple screens), as well as four USB 3.0 ports, an SD card slot, Gigabit Ethernet, Bluetooth 4.0, and a 3.5mm headset jack. They also both come with a wireless keyboard and mouse, but users will need to supply their own monitors.

Why is this important?

Though laptops and tablets get most of the attention, many consumers still use traditional desktops in their homes, and PCs have mostly lagged behind Macs and even Google's Chromebox line. Mike Nash, an HP vice president, explained why he thinks desktops matter:

The desktop tower PC continues to be a focal point in the home for sharing, creating, and entertaining. The HP Pavilion and HP Stream Mini Desktops deliver the benefits of a traditional desktop PC in a package that looks good sitting on a desk and is small enough to fit into an entertainment center.

That may be true, and the new boxes do look nice, but in reality, this is really a pricing story. Microsoft has been losing market share to Chromebooks, iPads, and Apple tablets. In some cases, because of the price difference, people buy a tablet or an older, discounted PC desktop as a home computer, or as a secondary device. HP's new machine offers a Windows-based solution for tablets, laptops, and now desktops.

Microsoft CEO Satya Nadella has been pushing his company toward an integrated Windows experience across all platforms. HP has now made that possible inexpensively.

Will it work?

HP is not the only Windows partner making low-cost devices -- Asus has a Windows 8 laptop at $179.99 -- but it is the only company with an elegant, integrated complete product line. The "Stream" line of laptops and tablets is good enough that they make you question why anyone would spend more. The Stream 8-inch tablet has specifically impressed me, not only for its value but also for how well it works.

With the new mini-desktops, HP has raised the bar on price. Microsoft is even going to have to create a new option on its desktop sales page within its Web store, where currently the lowest price tab is "$500 to $749" (though the only entry under that tab is a Lenovo all-in-one on sale for $399).

HP has createda new price point for PCs that's low enough to make the new boxes very attractive to home users and perhaps schools. In many cases in the past, both new desktops are cheap enough that not only will they keep some existing PC users from going to alternative devices, but they may even create some additional sales from people picking up an extra PC for the home.

Microsoft needed its partners to do this for Windows to remain viable, and HP is blazing a trail that others are likely to follow.

The article CES 2015: Has HP Created a New Category of PC? originally appeared on Fool.com.

Daniel Kline owns shares of Apple and Microsoft. The Motley Fool recommends Apple, Berkshire Hathaway, Google (A and C shares), and Intel and owns shares of Apple, Google (A and C shares), Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.