The world's largest manufacturer of semiconductor products,
) expects to start selling its set-top box, offering an
Internet-based TV service later this year.
The company said that Intel's TV service is expected to
include content from cable TV packages as well as Internet-based
content like Netflix's streaming service.
Though Intel is yet to secure deals with major content
providers, such as
Time Warner Inc.
), NBC Universal and
), it remains confident about obtaining them.
The company announced its decision to manufacture set-top
boxes (STBs) in Mar 2012. Intel already makes chips for STBs but
its decision to manufacture the entire box and provide
Internet-based TV service 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, that of making
processors for PCs, is witnessing lower demand due to declining
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
Eurozone debt crisis and weak PC demand. In order to expand the
company's bottom line, Intel has increased its efforts to move
beyond the computer industry.
The chipmaker's foray into this segment may be considered a
milestone. But the competition will also be fierce. Intel will
directly compete with pay-TV providers like
Time Warner Cable Inc.
(DTV), which already have a huge customer base.
Also, 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.
Currently, Intel shares carry a Zacks Rank #2 (Buy).
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