Report: Verizon could rescue Intel's odd set-top business


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Intel appears to be ending its puzzling set-top box experiment, as a report claims that the chipmaker will sell it off to Verizon instead.

When Intel announced plans to enter the set-top box market in February, observers scratched their heads. Now, news that it is in talks with Verizon to take over the business should come as little surprise, given that Intel’s experience in the consumer market is close to zero.

Officially, any talk about the talks is just that—talk. Intel declined to comment. But consider the timeline: Intel announced its set-top box plans in February, under the reign of chief executive Paul Otellini. By that point, Otellini was a lame duck, although the box’s development efforts were well under way. What seems clear is that newly-appointed chief executive Brian Krzanich was forced to initially half-heartedly endorse the effort, while executives worked to secure content deals. Unfortunately, it’s precisely those content deals that Intel had little experience negotiating, even after it brought in Eric Huggers from the BBC to head up those conversations. Now Krzanich is apparently looking for an exit from the box business.

Earlier this month, Intel reported no revenue or profit growth for the third quarter, indicative that times are tough. But Intel has also publicly announced its way forward: its Core architecture for traditional desktops and servers, plus a new, lower-power version of its Atom processors for emerging markets such as tablets and smartphones. Both leverage Intel’s traditional strengths in manufacturing and its existing partnerships with computer and tablet manufacturers. Put another way, Intel doesn’t need a consumer strategy.

Intel QX3 microscopeeBay
Intel’s QX3 computer microscope.

Believe it or not, however, Intel has gone down this road before. In 1997, Michael Bruck was appointed general manager of the Intel Content Group, responsible for striking deals with entertainment software and content companies to encourage them to write for Intel’s chips. In 1998, Intel and Bruck launched the Intel/Mattel Toy Labs, a joint venture to sell a range of toys through retail stores: the QX3 Computer Microscope, Digital Movie Creator, the Computer Sound Morpher, and the Me2Cam. The QX3 microscope connected to a computer via a USB cable, allowing users to view what the microscope “saw” on a computer screen. According to Bruck’s LinkedIn resume, the microscope won the Oppenheim Toy Portfolio Best Toy award.

But with Krzanich at the helm, it’s likely that Intel will simply divest itself of its fledgling experiment—not so much because the concept itself wasn’t viable, but there’s no real indication that Intel had the gumption for weathering the retail market once again. And so far, there’s been no real indication that Intel’s box, which some called “OnCue,” did anything different than the Roku line or any of a number of similar products.

Verizon, on the other hand, has a strong presence on the East Coast and other areas with its FiOS service, and, well, its latest set-top enhancements haven’t gone all that well. Marrying Intel’s technology with Verizon may turn out to be a win-win for both sides.

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