By Noel Randewich and Ronald Grover
DANA POINT, Calif. Feb 12 Top chipmaker Intel
Corp plans to launch an Internet television service
this year with live and on-demand content, entering a hotly
competitive race as its core PC business erodes.
Shifting into an unfamiliar and potentially costly market in
which Intel lacks experience and relationships, Erik Huggers,
vice president and general manager of Intel Media, said he is
negotiating with content providers.
He said hundreds of Intel employees and their families are
already testing a set-top box the company will sell as part of
Intel's move puts it into competition with heavyweights like
Apple, Amazon and Google that believe
the $100 billion cable television ecosystem is ripe for change.
The chipmaker plans to offer consumers smaller bundles of
content than those currently offered by cable operators, Erik
Huggers, vice president and general manager of Intel Media, told
the AllThingsDigital "Dive into Media" conference on Tuesday.
Asked if Intel has inked any content deals, Huggers said he
is working with providers and is confident Intel will have a
compelling product to launch this year.
"We have been working for (the past) year to set up Intel
media, a new group focused on developing an Internet platform,"
Huggers said. "It's not a value play, it's a quality play where
we'll create a superior experience for the end user."
Intel has struggled to get its virtual television service
off the ground due to unwillingness on the part of major media
content providers to let the company unbundle and license
specific networks and shows at a discount to what cable and
satellite partners pay, according to sources.
Silicon Valley has been taking aim at the U.S. cable
television market - dominated by major distributors such as
Comcast and DirecTV Group and program makers
like Walt Disney Co and Time Warner Inc.
Technology companies see opportunities due to reasons ranging
from shifting viewer habits to mounting programming costs.
A STEP BEYOND
Intel's plan, if successful, would go further than products
currently offered by Apple, Amazon and Netflix by
offering live programming as well as on-demand content.
"There is an opportunity to offer a bundle that can be
curated by the consumer, an opportunity to create smarter
bundles," Huggers said.
Intel's set-top-box will also have a camera that could be
used to automatically steer content and ads toward specific
"There's a scenario where the TV recognizes that it's you
and says 'Hey, I know what you like. I know what you want to
watch', versus the environment we're in today where the TV
literally is not interested in you at all," Huggers told Reuters
In an interview.
Some media executives are skeptical that Intel will be able
to convince content providers to agree to terms that are
attractive enough to make its service viable. That view was
shared by Bernard Gershon, head of digital consultancy
GershonMedia and a former Disney senior vice president for
strategic planning who helped develop Disney's online strategy.
"The chance that Intel launches is zero," Gershon, who
speaks with media and digital executives, told Reuters at the
conference. "They haven't cut any deals with any content
companies, and they are not offering something that
differentiates itself enough on service or price to get the
Analysts see Intel's leap into Internet television, along
with its growing focus on smartphones and tablets, as a way to
diversify beyond the slowing PC market.
"The question you have to ask with Intel is, Is anything
they do big enough to move the needle?" said Stacy Rasgon, an
analyst at Sanford Bernstein. "You're not going to make or break
the company on something like this."
Huggers said in the interview that Intel employees are
testing the device's user interface, sound and picture quality
and other features.
"We're actively testing it in the field with employees. It's
not the final product, but it's certainly functional," he said.
Industry insiders have said Apple may unveil a TV-based
device that has the potential to shake up the cozy television
content and distribution industry the way the iPod and iPhone
disrupted music and mobile content.
Sources say Apple, which already sells a $99 set top box
called Apple TV that streams Netflix and other content, has
opened discussions with providers but it is unclear how much
headway it has made, despite its reputation as a tough
Huggers previously worked at Microsoft and the BBC,
where in 2007 he launched iPlayer, an online service letting
viewers catch up with programs they missed on regular
"The model we envision is a model where live television and
catch-up television live in the same paradigm," Huggers said.
Intel's shares closed up 0.76 percent, at $21.19.