Intel Corporation (NASDAQ:INTC) is set to take on television and cable companies with a new product. The idea isn’t getting much support from industry watchers, and it faces stiff competition in an already crowded market. Is this what Intel needs to turn its business around or is it just a distraction?
Suffering from Change
Intel is best known for making the chips inside personal computers. That was a great business while the PC was quickly being adopted, but now that PCs are a mature product, growth isn’t what it used to be. In fact, as more and more people start to use mobile devices to connect to the Internet, PCs could see years of sales declines before they find a stable base.
Apple Inc. (NASDAQ:AAPL)‘s iPad is partly to blame for this trend. This tablet computer was the first to really prove that consumers don’t need a full-size computer, normally chained to a wall by a power cord, to enjoy a “full size” Internet experience. Tablets are truly a casual computer capable of doing all of the simple things that users do most frequently, such as reading email, checking a social network, or surfing the web.
While players like Apple have fully embraced the mobile space, through tablets and cell phones, Intel Corporation (NASDAQ:INTC) has been late to the party. This has left the company’s shares trading at historically low levels. It also has many wondering if Intel is headed for the technology dust bin.
There’s no question that television or at least video content, is an integral part of the future in technology. Netflix, Inc. (NASDAQ:NFLX) was one of the first companies to realize and act on this with its video streaming service. The move to streaming was a big one, since Netflix started as a mail-based DVD rental company. Now, however, the company’s DVD rental business is an afterthought in conversations.
What Netflix proved, however, is that customers are willing to pay for the privilege of controlling their video experience. For example, Netflix ushered in the concept of binge watching, in which a person will sit down and watch hours worth of the same television show. That is virtually impossible with the current business model of television stations. Netflix and its competitors also give customers the ability to watch on their own schedule, another impossibility with regular television.
Ripe for Change
Netflix and its brethren have clearly shown that the media business is ripe for change. However, how much change is a big question mark. Netflix, for its part, is working on creating its own content. This is a bold move to displace the industry leaders and control ever increasing content costs. The company’s CEO believes TV will migrate to the web and wants to be the first one there.
Apple, meanwhile, has tried, largely unsuccessfully, to launch a product dubbed Apple TV. However, it pretty much functions as a way to stream content to a TV, making it seem more like a fancy adapter between a TV and the Internet. Since more and more televisions are coming with their own Internet connections, the value of this is suspect.
Intel Corporation (NASDAQ:INTC) will face the same hurdle. One thing the device is trying to achieve, however, is a combination of live broadcast and archived video. Live is one major limitation of the Netflix service. Such things as Sports are massive draws and any service lacking that only ensures that television and cable still provide a vital service. So, Intel looking to get into live broadcasts is a great idea.