Intel plans to launch this year its own set-top box and streaming video service, aimed at the consumer market. One can assume this will first target the US market. Erik Huggers, the Dutch Intel executive who worked with the BBC on developing the iPlayer (catch-up TV), announced the news at a conference. The service is expected to include both linear TV as well as catch-up services and video-on-demand. Intel Media will unveil a new brand name for the box and service. The box will be base don Intel's Atom processor series and be combined with a camera. The latter will allow recording of who watches what on the service, opening up possibilities for targeted advertising and personalised recommendations.
Intel's motivation is clear: the PC market is in retreat and its efforts to break into the mobile market are going slowly. So in addition to the smartphone market, it's attacking the smart TV segment. As a chip supplier this has proven difficult to date, as a number of players have switched from the Atom platform to ARM or Broadcom products (Google, Boxee). This means Intel is starting from a weak position, and it's tempting to think Intel's chances are slim:
- There have reportedly been problems with Atom processors.
- Intel is new on the consumer market. This is a difficult market, as underlined by Cisco's decision to sell its modem business Linksys to Belkin.
- A new brand name will have to be launched on the market. A parallel is Microsoft's Xbox, which has proven successful, but not without spending a great deal of time and money.
- traditional box makers: Scientific-Atlanta, Humax, Arris/Motorola, Pace, etc.
- new box makers: Microsoft, Apple, Roku, Boxee
- software players with their hardware partners: Google, Yahoo!
- TV makers: Samsung, Panasonic, LG, Sony, Philips, Toshiba, etc.
- quality, user-friendliness and design, in which Intel is years behind for example Google; and
- content rights (which are tough to negotiate).
One could ask why Intel doesn't instead pursue a takeover. If it can get the content industry on board though (Netflix, which aims to be on every platform, is inevitably already signed up), then Intel could in theory have a nice product/service. Offering not only catch-up and VoD but also live TV could be the big differentiator, and this may be where Intel is focusing its negotiations with the content producers.
It's also important that Intel earns something from the venture. Google and Amazon are putting pressure on prices as they can spend to no end on their services. They earn money from other things (respectively advertising and content). Intel will only be successful if the business reaches a sufficient scale, with mass take-up by consumers.
There's also the question of whether Intel's plans go far enough. It's making the processor, box and service, but does not have a direct presence on the screen. Yahoo! has agreements with numerous TV markets, Amazon makes e-readers and tablets, and Google has its own series of smartphones, tablets and notebooks. Not to speak of Apple, which is also thought to be planning its own TV. As the makers of screens (smartphones, tablets, smart TVs) have increasingly found their way to consumers, they also function more and more as gatekeepers.
In summary, while one can be skeptical over Intel's chances of success, the launch of its new service later this year will be watched closely by the market.
