Intel's (INTC) plan on introducing its "web based television service" may not take place at year's end as originally planned. The company is seeking a partner who already has a good base of Internet subscribers to partner with them in an effort to accelerate the revenue base of this project.
It is no easy task to launch a service like this; paying the networks what they're getting from cable companies is a big commitment without existing customers.
Intel's main focus since the new CEO, Brian Krzanich, took the reins has been to place a high emphasis upon getting the company's chips into mobile devices and that's why a partnership for its "TV strategy" would help create a revenue base right away and not take important funds away from chips.
The Internet TV service is an attempt by the company to move away from its high dependency upon the PC market by looking for other income sources. Intel does not have a proven track record of creating "revenue cultures" outside of the PC market and I haven't heard a lot of fanfare by investors for its TV service either.
Mr. Krzanich is CEO for a reason and I believe his focus on "chips in mobile devices" is the first priority in today's market if the company is even going to be successful in with Internet TV.. In today's quickly changing market, large companies like Intel need to move into new ventures if they're going to continue to compete. Companies continue to move into arenas that they never have before. (Like Google into the Internet TV market)
Intel knows if it's going to succeed in the Internet TV market, it needs to be successful in the mobile chip market. It is responsible for planning its own seeds in whatever market it wants to move into. It is responsible for successfully generating revenue while many tech Giants mesh into competing markets because of technological overlap.
If it can make a dent, this is a great revenue market for Intel. The biggest players in the game right now are Time Warner (TWX) and DirecTV (DTV). Intel would be treading upon their turf offering pay-TV services through web connections. The idea is to give viewers control of what they watch on their schedules. The company would like to offer a combination of live TV as well as an on-demand video library.
It would be great if the company could create a nice revenue stream with the service; I can understand why investors are not overly enthused at the company's move. This is going to be a fierce market in the future. Some of the big names we are familiar with like Apple (AAPL) and Google (GOOG) have also been developing web-based pay-TV services. The market will be big because viewers will watch shows from a traditional home base or their smartphones.
This is what Apple and Google have been developing:
Apple Internet TV
The Apple TV is not a TV at all, but a small network media player that can stream from your computer and online. It is similar to other well-known devices like Roku because it connects to the TV with a wire and to the Internet through Wi-Fi. The newer generation models only stream media whereas the early models had a hard drive that you could sync with your computer's iTunes library. If you have movies that are saved outside of the iTunes library, it could not be accessed by this device. Like the Roku it does offer connections with other Internet providers like Netflix and Pandora.
A recent 6.0 software update appeared to be full of glitches and Apple quickly pulled it from the market.
Google Internet TV
Google Internet TV is not much different from Apple in the sense that it also is offering TV shows and movies to watch at your own convenience through outlets like Netflix and Hulu. The company is also trying to integrate its Google TV into televisions and BluRay players via Sony. The one thing different that Google TV will have over Roku is that it's "Google Chrome" browser will also be included in the Google TV so that if you feel like browsing the Internet like you can a new computer-you can!
How big can the "Internet TV" market become? If we don't take into account mobile phones or tablets, or even computers, it is estimated that there are more than 114 million television "households" in the United States. More than 70% of these are connected by cable. Considering that the popularity of cable TV has been on the downswing for a number of years because of the high price and the mobility of society," Internet TV" has never been more popular. This is particularly true among the younger population who tend to rely more and more on broadband.
I believe Intel's move to Internet TV is a smart move for the company if it looks for a partner. I understand the company would like to raise the competition level for the major cable companies, but these companies are also exploring and moving into the Internet TV market. They already have established customers and they understand that the price for cable is becoming a threat to maintaining a strong client base.
On top of this, the main competitors like Apple and Google are more established and have more expertise in this field. Although I believe Intel is a very strong company and can succeed in whatever they do if they put their minds to it, I am not overly enthused about their move into this market. I guess I would take a more of a "wait-and-see approach" because the competition is so fierce and I think it would take quite a while to establish a base in this market for them.