Intel TV – Chip magnet

Intel’s aspirations in TV are about supplying chips.

• Intel appears to be closing in on acquiring TV shows and movies to offer to consumers as a pay-tv service.
• Time Warner, NBC Universal and Viacom are all in discussions with Intel and success would give Intel critical mass to start offering a service.
• This is going to be effected through the release of a set top box and a service later this year.
• Intel hopes that the promise of a better user experience as well as integration with smartphones and tablets will draw consumers in.
• The user experience for TV certainly needs work and there is opportunity to win over cord cutting consumers but why should Intel be any good at this?
• Intel is a master of manufacturing chips for PCs and servers. Its real strategy is to broaden its horizons and to offer chips for other electronic items such as mobile phones, TVs and set top boxes.
• It is here that I think that the real reason why Intel is buying up TV rights is to be found.
• The next several years will see a huge shift in the way that people watch television which means that the hardware that they use is also likely to change.
• I believe that Intel’s real intention is to become the main chip provider for the set top box or part of the television upon which the TV experience runs.
• Hence, I see Intel’s coming set top box very much like the Microsoft Surface.
• It’s a product that shows everyone what is possible and encourages them to make the devices and offer a service using Intel’s chips.
• I suspect that Intel will also end up as a wholesaler of this content such that smaller companies who would have no hope of obtaining the rights can enter the market.
• This is exactly the strategy that Qualcomm pursued with MediaFLO, its broadcast mobile TV service that never took off.
• If Mobile TV had been huge, Qualcomm would have ended up providing almost all the chips to make it work as well as a one stop shop for the content.
• I do not for one second think that Intel wants to become a provider of consumer electronics or a provider of television services both of which would have a deleterious effect on its margins.
• By enabling competition for DirectTV, Comcast and the like, Intel is in a good position to be the silicon supplier of choice for providers of cord cutting TV services.
• This is a business that it will be really good at rather than wasting millions trying to get into a business about which it knows nothing.