Ever since Netflix changed the way we think about TV and
movies, everybody’s wanted a piece of the TV viewer pie. Intel is targeting
users who no longer see cable as a necessity and get their TV shows elsewhere.
By providing a selective feed of channels, they plan on disrupting the system
with their new set top box: OnCue. The Oregonian’s Mike Rogoway was one of the
first to catch this covert project:
Intel Media aims to remake TV with its own technology
Officially, it's one of Intel's most closely held secrets. But hundreds of your Oregon friends and neighbors already have it.
It's OnCue, a set-top box from a new division and Intel's first consumer product since the dot-com era. As early as this fall, against monumental odds, the company aims to break up cable TV's hold on American households and deliver subscription TV over the Internet.
The chipmaker has been quietly testing OnCue with more than 1,000 of its Oregon employees this summer and is now expanding the trial to more workers. It hopes for a formal launch in a few cities later this year, provided -- and this is a big caveat -- it can line up programming from cable networks.
OnCue represents a dramatic departure for Intel. Though its "Intel Inside" sticker rests on hundreds of millions of personal computers worldwide, the company usually stands in the background. Its computer chips are the brains behind new technologies, not the brand.
Not, until now.
Working in secret, the new Intel Media unit has assembled a device that it claims will be sharper, simpler and more sensible than anything the cable operators offer. They've spent months negotiating with cable networks to win the rights to their programming for OnCue.
Intel joins other companies, among them Apple, Google and Sony, that hope to use the Internet to transform the way Americans watch TV.
"The grid on the screen, the remote control and the device, all of it has been re-imagined," said Courtnee Westendorf, who spent 11 years marketing the iPod and iPhone for Apple before joining Intel Media last year.
Because Oregon is Intel's biggest site, it's also OnCue's largest test market. Its metro-area employees have been evaluating the user interface for months, helping Intel's designers refine and improve their approach and sleuth out bugs in the software.
Intel develops most of its new technologies in Washington County, where it has 17,000 employees and three massive research factories. OnCue, though, is very much a child of the Silicon Valley.
Housed within corporate headquarters in Santa Clara, Calif., Intel Media is nonetheless set apart from the rest of the company:
Drive past the corporate entrance, round a corner and enter through a parking garage. Down a long hallway, and up two flights of stairs, is a locked door that guards the engineers designing OnCue.
The isolation is deliberate, said Intel Media spokesman Jon Carvill: "In many ways it's a start-up that's being incubated by Intel."
Intel Media invited The Oregonian into its California offices to discuss its strategy and goals, but it kept OnCue itself out of sight.
The bustling, wide-open room evokes a network newsroom. It is a stark contrast to the cubicle farms in which employees labor in Hillsboro and underscores Intel's efforts to nurture something new and distinctive.
Nearly everything about OnCue is secret, even -- officially -- the name. Tech site GigaOM uncovered it in a trademark filing in July and sources familiar with Intel's launch plans confirm that the company plans to go with that name, coupled with the Intel brand.
The secrecy has stoked intense speculation in the gadget-hungry tech press in a way the launch of a new generation of microprocessor never does anymore.
Intel has given broad outlines of what it's planning: A TV box and subscription service that will offer channel lineups similar to what cable TV offers, at comparable prices.
The company is targeting "cord cutters" and what it calls "cord shavers" and "hassled cobblers." They're an emerging class of avid TV viewers who find what they need online instead of on cable. But that's not easy -- viewers must piece together programs from various online services, and many sports and premium cable shows can't be streamed (not legally, anyway) without a cable subscription.
What will set it apart, Intel promises, are subscription plans better tailored to individual tastes: Sports, for example, or family TV. And Intel promises a much better user interface than the clunky lineup grids the cable companies employ so that it's easier to see what's on, and easier to find programs you like.
"I have no doubt it will be a compelling product," said Tim Hanlon, who's worked with several digital video companies and now consults for the industry at his Chicago firm, The Vertere Group.
He saw OnCue prototypes several months ago and came away quite impressed. "To me, it looks quite elegant and potentially a game changer in terms of ease of use."
And yet, he said, Intel faces "a triple-whammy challenge" popularizing the new device: It must create great technology from scratch, it must persuade viewers they need it, and it must transform itself into a consumer brand.
Intel has occasionally tried its hand at new consumer technologies. Some past efforts:
Connected Products: In the dot-com era, Intel produced MP3 players, digital cameras and even electronic toys that carried the Intel brand. In 2001, the company announced plans to produce an Intel "Web tablet." But the company shuttered its Connected Products division in 2001, after the dot-com bubble burst, saying "It simply was not meeting expected revenue targets." The tablet never came to market.
Viiv: This tag (rhymes with "five") began appearing on "entertainment PCs" in 2006 to signify they met Intel standards for the "digital home." But the concept never caught on, and Intel retired the brand in 2009.
Google TV: Intel appeared to score a major coup in 2010 when Google and Sony announced plans to use Intel chips in "Google TV," televisions and set-top boxes that used Google software to connect to the Internet. Major networks blocked Google TV from streaming shows from their websites, and consumers had little appetite for surfing the Web on their TVs. Google TV is still available, but its current incarnation uses chip designs from Intel rival ARM.
"To many consumers, Intel doesn't mean anything. It means nothing," Hanlon said. "Essentially it's like a brand new company, making a brand new product. They're both very expensive when you have little or no brand equity."
There are other obstacles, chief among them striking deals with the cable networks that control the popular sports and entertainment channels Intel must carry if OnCue is to have any traction with viewers.
On that front, prospects remain uncertain.
"We're broadly engaged," said Intel Media's Westendorf, but neither she nor anyone else at Intel will guarantee the company will have the programming it needs to meet its fall launch target.
"We will not bring a product to market without a compelling content proposition," she said.
In his only public comments on Intel Media since becoming chief executive last spring, Brian Krzanich sounded tentative about the new venture.
"We're being cautious. We're experts in silicon, we're experts in mobility, in driving Moore's Law," Krzanich said in June. "But we are not experts in the content industry, and we're being careful."
Intel Media is run by Erik Huggers, an Intel vice president who worked previously at Microsoft and the BBC. He's assembled a team from such high-tech and media heavyweights as Apple, Netflix, Microsoft, Sky TV and Sony. Intel engineers in Oregon are participating, too, providing technical support for the project.
Intel's approach is, in some ways, reminiscent of the one taken with Xbox, which was developed quite apart from Microsoft's existing technology and brand. It's a comparison Intel welcomes; Xbox has been a dependable source of innovation for Microsoft at a time when the rest of the Redmond, Wash.-based company has struggled to connect with consumers.
OnCue emerges at a crucial moment. PC sales are ebbing, and Intel has struggled to place its chips in smartphones and tablets.
"Like a lot of companies that have been focused on the PC ecosystem, they're looking to expand to other types of smart devices," said Ross Rubin, a veteran technology analyst who now has his own firm, Reticle Research.
The video market may not be any easier. Roughly 9 in 10 American households have cable or satellite TV, and prior efforts to open up the market have met with miserable failure. Viewers cling stubbornly to their cable and satellite subscriptions, if for no other reason than no one has given them a reason to change.
"It's likely not going to take the world by storm overnight," Rubin said. "There's a lot of inertia in the pay TV market. It's disruptive and a hassle to swap out your set-top box and change a billing relationship."
If Intel is patient, though, the long-term payoff could be tremendous. The same inertia that makes subscription TV a hard market to break into gives it tremendous staying power and would open a new class of revenue stream for Intel, and a new market for its chips.
Or it could simply seed the market with its device, creating demand for Internet-based subscription service and for new Intel chips.
"There are a lot of places where a separately spun Intel Media could go to," said the Vertere Group's Hanlon.
If the device opens up the market for set-top-boxes, if it demonstrates a better way to find or view TV, cable operators or satellite companies might seek to license Intel's technology -- or buy it.
"I can't imagine," Hanlon said, "that Intel corporate isn't thinking about what a spun off Intel Media looks like."