Intel hopes to establish a larger presence in TVs and set-top boxes with the Google TV platform, but the company has to overcome major hurdles including past failures and pricing concerns, analysts said.
Google, along with partners Intel, Sony and Logitech announced last week the Google TV platform, which will blend broadcast TV and internet into one interface. Google will supply the software, and the service will be available later this year in some Sony high-definition TVs and Blu-ray DVD players, for which Intel will supply the highly optimised Atom CE4100 chip.
Intel's microprocessors power more than 80 percent of the computers worldwide, but the company has yet to establish a presence in the TV space, despite multiple attempts to enter the market over the past decade, analysts said. Previous efforts by Intel and former partners to shift TV content into PCs were rejected by consumers, and now the company is changing tactics to get internet content into TV sets, set-top boxes and DVD players.
The cost of Intel chips is also considered comparatively higher than its competition, which could increase TV prices, analysts said. There are cheaper television sets that provide standard web interfaces that could compete with Google TV offerings, which could affect Intel's efforts to re-establish itself in the market.
Intel has been trying to woo major TV makers and consumer electronics companies to use the latest Atom CE4100 chip. The chip includes a processor core that can run at clock speeds of up to 1.2GHz and is capable of decoding two 1080p video streams. The chips are in production, and the company has said it has received orders for more than a million CE4100 chips.
With Google, Sony and Logitech, Intel is getting the best hardware and software providers to push its chips into living rooms, said Wilfred Martis, general manager for retail consumer electronics at Intel's Digital Home Group.
"I don't think all the pieces were in place as they are today," Martis said. More homes have high-definition television sets, online video is garnering more attention and broadband is easily available, which was not the case earlier in the decade.
Intel's aspirations to enter the TV space date back to the late 1990s, but many of those efforts were not successful, said Nathan Brookwood, principal analyst at Insight 64. One of Intel's earlier efforts was Viiv, a platform that included hardware and software technologies to bring TV to PCs. But the effort never got off the ground as users had to wait for a PC to boot, and the user interface wasn't designed for TV watching, Brookwood said.
Intel's most recent attempt to push its processors into TVs and set-top boxes was through the Widget Channel, a platform designed to meld television and the internet, which was announced in 2008 with Yahoo. Devices would be able to run 'widgets', or mini-applications that complemented TV viewing with nuggets of information from the web. Many companies demonstrated TVs and set-top boxes with the Widget Channel, but the platform is still trying to establish a foothold.
The Widget Channel was a way for Intel to spread awareness about the ability to combine the TV and web experience, Martis said. But it didn't open up the internet enough to provide the full web experience, which Google TV will do, Martis said.
Google's real value to the pot is its name, but it doesn't necessarily guarantee success for Intel as there are many TVs that provide standard interfaces to access web content, said Dan Olds, principal analyst at Gabriel Consulting Group. Vizio, for example, provides inexpensive, internet-connected HD television sets with wireless capabilities that provide access to services from sites like Amazon, Pandora, Netflix and Blockbuster.
Intel's success may partly depend on how Sony prices its TV sets and other devices, Olds said. If the TVs are reasonably priced, Intel will be able to push more chips into TVs and set-top boxes.
But Intel has a reputation for expensive chips, which could raise the cost of TVs, said Paul Gray, director of TV electronics at research firm DisplaySearch.
A typical TV and video processor chipset costs around $15, and Intel's more expensive chips potentially could add hundreds of dollars to the price of TVs, Gray said. Each extra dollar can add close to $3 to a TV's retail price, Gray said.
The CE4100 will be cost-competitive compared to rivals, said Eric Kim, senior vice president and general manager of Intel's Digital Home Group, during a Friday morning webcast.
Intel's rivals in this space include Texas Instruments, Qualcomm, Samsung and other companies making chips for TVs and set-top boxes.
For the price, Intel's chip could provide software and performance benefits over its competitors. Intel's chip may appeal to TV makers as it will minimise software development, maintenance and validation costs, Gray said. Margins on TV sets are thin, and TV makers, who are sluggish in software development, can't afford to spend much on software. Intel's hardware platform provides seamless internet access, and TV sets can be upgraded to support the Flash platform without major software investments.
And for TV makers who want Google TV, Intel's chip will be the way to go, Insight 64's Brookwood said. Compared to competitors, Intel chips may also be better capable of decoding high-definition content, and also of running specially designed applications that can be manipulated with remote control.
Intel is also developing its own lightweight Linux-based operating system, called Meego OS, which it hopes to push into TV sets and set-top boxes in the future, Intel's Martis said. The company wants to offer choice, and Google TV won't affect plans to push Meego into consumer electronics.