Intel Sets Aim at Internet Television, Plans Launch in 2013

Andrew Klips  |

Chipmaker Intel Corp. (INTC) said at the AllThingsDigital “Dive into Media conference that it intends to introduce its Internet television service in 2013 with both live and on-demand content as the company delves into unfamiliar territory with plans to revolutionize the television industry. The new electronic device and service will be sold directly to the public by Intel, but under a new brand name. The product is currently being tested in “hundreds” of Intel employees’ homes, according to the company.

Intel also intends to bring the service to mobile devices, but hasn’t provided any details on what type of devices.

The product has been the topic of rumors and news for nearly one year as Intel looks for ways to diversify from the dilapidating PC markets and branch into mobile devices and television markets.

Erik Huggers, head of Intel Media, gave some information during an interview onstage with Walt Mossberg at the conference, but still didn’t reveal many details. Huggers did disclose that the new set-top unit will have a camera that can detect who is in front of it.

Huggers said that Intel is working with the entire television industry to provide an “all-in-one solution,” combining live television, on-demand services, so-called “catch-up” services (which are a log of shows for viewing that have recently broadcast), and other services and options that will streamline an expanded list of content.

Huggers also noted that the new product is not designed to reduce a consumer’s cable bill; it’s an add-on “quality play” and not a “value play.” Nor will the service provide “a la carte” choices for programming, meaning users won’t be able to pick and choose only the shows it wants to watch. It’s still going to have bundle packages. “I don’t believe the industry is ready for pure a la carte,” said Huggers.

While the new brand of box – for which a name has not yet been disclosed – may be a new entity to the public, Intel and Huggers are completely nascent to the industry. Intel processors powered Sony’s (SNE) Google (GOOG) TV box, D-Link Boxee Box and Logitech’s (LOGI) Google TV boxes, which failed to gain strong consumer support, leading to Intel discontinuing operations on that front in 2011. Huggers, who joined Intel in 2011, also adds experience in the digital media arena from positions at Microsoft (MSFT) and the BBC.

Google is still selling its Google TV product and reportedly making updates to try and gain more traction in the space. Apple (AAPL) also has its own TV unit and is believed to be developing a new, more advanced device. Microsoft, who already uses motion-control features in its Xbox Kinect, is also vying for a portion of the television market. Amazon (AMZN), another industry heavyweight, also is making a move in the internet television direction.

Intel is surely going to face a series of challenges with its new initiatives. Google has struggled to generate meaningful revenue to date amid hefty resistance from cable providers who do not want to see their $100 billion industry set on its side and consumers that don’t want to pay twice for similar services. The camera on the new Intel box may be appetizing to advertisers with an unquenchable thirst for more targeted marketing, but privacy concerns are already being raised as well. There are also plenty of skeptics that don’t believe Intel will be able to ink the programming deals necessary to get its product off the ground or compete with industry behemoths like Google or Apple.

Only time is going to tell how this new endeavor plays-out for Intel.

Shares of INTC closed ahead by 16 cents at $21.19 on Tuesday and are down about 17 percent in the past 52 weeks.

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