The world's largest manufacturer of semiconductor products,
Intel Corp's ( INTC ) media group
plans to hire 60 engineers experienced in cloud computing, user
interface design and security to prepare itself for the launch of
its Internet-based TV service and accompanying set-top box
Last month, Intel announced its plans to sell consumers a
television set-top box that offers content from cable TV packages
as well as Internet-based content from Netflix
Inc. 's ( NFLX ) streaming
service. The video service will also be available on mobile devices
such as Apple Inc.'s ( AAPL ) iPad. Though
Intel already makes chips for STBs,its decision to manufacture the
entire box is the first of its kind.
Intel is best known as a chipmaker and remains well positioned
in the server segment. However, its main business -- making
processors for PCs -- is seeingvery low demand as consumers are
increasingly moving to tablets and hybrids.
According to research firms IDC and Gartner, the PC industry was
weak in 2012 and is expected to remain so in 2013 due to the
softness in the memory market, specifically in DRAM; the ongoing
Euro zone debt crisis and weak PC demand. In order to expand the
company's bottom line, Intel has increased efforts to move beyond
the computer market.
However, its success as a virtual cable operator remains unclear
due to several hurdles associated with this move. The high cost of
TV programming channels remains the primary problem. Incumbent
cable, satellite and telecommunications companies already pay
nearly $38 billion per year to license TV channels. Intel may also
have to bear the brunt of higher costs.
Internet bandwidth could be another hurdle. The inability to
guarantee enough bandwidth for high-quality video at all times of
the day could divert the interest of the subscriber.
The chipmaker's foray into this segment may be considered a
milestone. But competition will also be fierce as many media firms
as well as technology companies such as Apple,
Microsoft ( MSFT ) and
Google ( GOOG ) are vying for a
share of the pie.
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