Intel? Really? There were rumors and reports for months that Intel was mounting a play for internet TV, but there was always an element of implausibility to them. Finally, on February 12, Intel VP Eric Huggers publicly announced that the company had been negotiating with major content companies and would introduce a set-top box and internet television platform before the end of 2013. But the foggy aura around the idea hasn't gone away. The disbelief isn't just due to the lack of concrete details, or the prospect of a top chipmaker competing with established cable giants like Comcast and Time Warner Cable. It's because we've been burned by big promises before.
Make no mistake: Intel is proposing something genuinely audacious here. It's live multichannel programming delivered over a broadband data pipe, but sold separately. It might be delivered over coaxial cable if that's where you get your broadband, but that's an accident. It could just as easily be over fiberoptic or wireless. You could switch providers and keep your TV service exactly the same; you could move across the country and keep your TV service exactly the same.
"You would have your own broadband and we provide the device and the service," says Intel Media spokesperson Jon Carvill. Later, Carvill clarified: the customer "would buy the device and then subscribe to the services they want… Live TV, on demand content, and applications." It's a big bet that broadband speed and ISP data caps will continue to increase, as ISPs focus on what's increasingly the most profitable part of their business, the data plans.
In principle, this means that Intel Media — this is the name of the group within Intel, and the device and service won't be Intel-branded, but this is what we'll call the service here — can go anywhere that any kind of broadband internet goes. Unlike Google Fiber, you don't have to wait for Intel to come to your town. Buy an Intel box and you're ready to go. (Hold onto this. It is more radical than it first appears.)
Intel's proposal is genuinely audacious: live and catch-up programming sold independently of the data pipe
Intel Media also proposes to offer a full slate of what Huggers calls "catch-up" television, on the model of BBC's iPlayer. This means subscribers would have digital access to every program for seven days after transmission, without having to program a DVR. That's real cloud-based delivery of television content. The service would also include an expanded video-on-demand library similar to what most cable, satellite, and telecom companies are offering to compete with Hulu and Netflix's libraries. Finally, it would offer "TV Everywhere"-style delivery of the service to every screen, from your television set to your mobile phone — a small miracle of technology and digital rights negotiation that's become almost commonplace in the last two years. Smart TV-style applications for the television set will also be there, but for now, TV apps are an afterthought. Almost no one is interested in these gadgets and gizmos anymore. Smart TV apps have changed no behavior and they have moved no product.
Living room communications applications are a different story, one still in its early moments. One of the more intriguing if slightly puzzling hardware features of the Intel box is its built-in camera. The camera identifies individual users and personalizes content according to each user's profile — which barely raises a blink for anyone with an Xbox Kinect but when you frame it as "in Soviet Russia, your TV watches you," comes off as a little creepy. At Forbes, analyst and AMD veteran Patrick Moorhead dives into the announced and likely personalization features, pointing out that Intel's camera can be turned on and off (it even has an old-fashioned physical shutter) while also noting the possibilities for Skype-like whole-room video conferencing, social TV viewing with video and audio of your friends sharing the screen, and differentiated profiles for each member of the household to prevent Netflix-style queue and recommendation creep. Intel also has some pretty substantial R&D investments in eye-tracking and other user interface innovations, and it's done some substantive work on smart homes and living-room based computing. For now, though, Intel's focus and killer app is television.
Channel bundling remains a fact of life, but Intel promises "flexibility"
Will this feature set satisfy every last wish of those who wish to break big cable's back on the internet's rock? Of course not. Channel bundling will remain a fact of life with Intel Media. Bundles have never been dictated by the cable companies alone but largely by the television networks and their parent companies. Disney (ESPN, Disney, ABC, etc.), Time Warner (CNN, TNT, TBS, TCM, Cartoon Network, HBO, etc.), and Viacom (MTV, Comedy Central, Nickelodeon, BET, etc.) like the power of selling their channels in bulk, and most consumers are loathe to part with one or more of each media conglomerate's tentpoles. The point of Intel seeking to be content-competitive with cable is that the programming and networks will remain largely the same.
Still, the fact that Intel can offer an alternative package or packages to compete with your local cable or telecom provider could be quietly disruptive. Verizon FiOS has begun offering a sports-free cable package at a discount, but you have to either already be using or switch your entire stack over to FiOS. Intel's Carvill declines to comment on what specific bundles may be offered but says, "we do think there is a better way to bundle with more intelligence, curation and flexibility then is offered today." In his interview with AllThingsD's Walt Mossberg and Peter Kafka, Huggers says essentially the same thing. "I don't believe that the industry is ready for pure a la carte," says Huggers. "I believe there is value in bundles, I believe that is a form of curation." Like so-called "smart TV" interfaces, current multichannel bundles have lacked taste; part of Intel's success or lack thereof will be whether it can successfully change that.
Taste? Really? Intel?
So far, everything Intel has announced is very promising. If Apple's Tim Cook had walked on stage with Walt and Peter and announced the same set of services, the entire internet would have boiled over by now with frothy speculation. But Intel is not Apple, and Eric Huggers is not Tim Cook.
Intel is the tech giant we've taken for granted. It's one of the leaders in a field that has generally spectacularly failed to understand the hearts and minds of consumers. Also, we can't forget: Intel was a key partner in the launch of Google TV (along with Sony, Logitech, and yes, Google), which launched in a thick cloud of promises and potential but in almost two and a half years has done almost nothing to change our experience of television.
Intel comes to television not out of overflow but of necessity
Now, Google and Apple got into internet television mostly because they'd conquered their corners of the desktop and mobile markets and were trying to expand into new spheres. Intel comes to television out of necessity. The market for personal computers, the market that Intel made and made Intel, is slowly but surely peaking and beginning to retract. The growth market for computing hardware is in lightweight, low-power, custom-designed ARM chips, and Intel has repeatedly tried and failed to establish itself in this market. In time, Intel may still reconfigure itself to play a meaningful role in mobile, but it's a hard, thorny, issue. The contraction of the PC market means that the time Intel needs to reconfigure itself for mobile devices is quickly running out. As a chipmaker, Intel needs a new market badly. It needs one badly enough that it's willing to do things it's never had to do before to create one.
Internet TV is hard in ways that have little to do with technology. Striking deals with content partners is very hard. Bringing a product to market that's comparable with what cable and satellite providers can offer, let alone more compelling, is extremely hard. It's hard if this is what you do every day in your core business. It's unbelievably hard if you've never done this before. Very few people would be surprised if Intel, like Google, couldn't pull this off.
But wait — what if Intel could?
Intel has no conflicts of interest with television; it has no strategy taxes
The fact that Intel doesn't by and large work in media could be a handicap, but if you stop to reconsider, it potentially gives Intel a huge advantage. Think about it: how was Google ever going to make a deal with Viacom when Viacom was suing Google? How were companies like Google or Yahoo built on selling advertising ever going to meaningfully share data and revenue with other companies built on advertising like TV networks? How were Sony or Samsung ever going to create a smart TV platform large enough to compete with cable when their businesses depended on selling giant multithousand-dollar screens that were only updated every few years? How would Apple, or Microsoft, or Amazon, or Netflix create new deals for live TV with networks when they already had huge businesses in selling digital video in completely different formats?
Intel has no conflicts of interest with television; it has no strategy taxes. All it has are years of R&D into hardware for the connected home, a solid history of developing hardware standards and prototypes, and many, many chips built for graphics-intensive, generally stationary devices that badly need somewhere to go.
"We're not trying to take semiconductor personnel and turn them into software and media experts."
Also, the media pedigree at Intel is actually very good. The Intel Media team is led by Huggers, who helped develop iPlayer for the BBC, a huge hit and a clear model for how Intel sees the future of television. Intel has already been through the Google TV experience, and everything good and bad about those partnerships. It's also built itself up from there. "Erik's assembled a pretty incredible senior leadership and hired a significant number of new people into Intel Media from the TV, software and entertainment space," says Carvill. "These people bring unique skill sets from across consumer electronics and entertainment and come from such organizations as Apple, BBC, Disney, Google, Jawbone, Microsoft, Netflix, Rovi, Sky, and Sony Pictures. We're not trying to take semiconductor personnel and turn them into software and media experts."
The most important experiment, though, is even more recently in Intel Media's past. Intel played a key role in the development of Comcast's X1 service and gateway device. X1, Comcast's slowly unrolling, next-generation platform and interface, may give you the best indication as to how Intel Media would look and work, and it's really rather remarkable. It has universal search bridging live, recorded, and on-demand TV, intuitive menus. It blends natural and graphic user interfaces. It pulls in social media integration, profile-based personalization — all the smart TV bells and whistles.
Don't think of Intel as a chip company, think of Intel as a technological standards company
Intel has licensed the X1's reference design from Comcast for its own set-top box. When the licensing deal was announced in October, the thought was that Intel would build boxes for other cable providers. Maybe Intel still will, but it's clearly going to be using and adapting some of that technology for its own over-the-top service. If cable companies come calling too, then it's a different ballgame. Then Intel is in a position where it can define a new standard for internet television, whether or not its own service takes off.
This may be a useful reframing. Don't think of Intel as a company that makes processors. Think of Intel as a company that makes technological standards. After all, the genius of the Wintel era wasn't really in the Pentium chips or auto-cascading spreadsheet windows. There were a lot of ways those particular innovations could have played out. It was that two companies, Microsoft and Intel, were able to create a set of standards flexible yet rigid enough to support entire ecosystems of hardware vendors and software developers, but to also ensconce themselves at the top of that mountain for decades. Is there any market that more badly needs a flexible yet rigid set of technological standards more today than television? Are you really going to count out Intel, one of the most resourceful and resilient companies in the history of technology, when everything is pointing toward the living room as tech's next big battleground, and when Intel literally has nowhere else to go? We've been waiting for years for someone to do something to rethink the cable box. Maybe we're finally here.