Intel to enter consumer market

By Chris Nuttall in San Francisco

Published: August 25 2005 00:00 | Last updated: August 25 2005 00:00

Intel announced on Wednesday an expansion into consumer markets with technology that brings it head-to-head with the likes of Sony and Toshiba.

The leading computer chipmaker unveiled “Viiv” as the new brand and technology platform that would spearhead its assault on the unfamiliar territory of consumer electronics and the next generation of entertainment devices.

The company said Viiv would be launched in the first quarter of 2006 with a marketing campaign and a number of manufacturers signed up to feature the technology in their products.

Intel faces serious competition in a field where competitors such as Sony, Toshiba, Texas Instruments and Philips have more experience.

Don MacDonald, head of the Digital Home group formed in January, told the Intel Developer Forum in San Francisco that there was a “perishable window of opportunity” for the company to make an impression on a market that has been dominated by companies with generations of expertise.

“Our brand means nothing in [the consumer electronics] space, to do our job is to make that brand mean something,” he said later in an interview.

Viiv represents the second incarnation of Intel`s “platformisation” strategy. The first, Centrino, bundled a processor, chip set and wireless capabilities to boost sales of laptop computers. Since its introduction in 2003, Centrino has topped $5bn in revenues and has become the company`s main growth driver.

Mr MacDonald said Viiv faced a much tougher challenge to establish itself.

“Centrino was like preaching to the choir if you had a notebook, here was a better notebook [Viiv] is getting people to do things they are not used to doing.”

Viiv will initially be a feature of entertainment personal computers running Microsoft`s Windows Media Center Edition, featuring digital video recorders and ideally linked to living room televisions.

The platform`s features will include surround sound and the TV-like ability to turn the computer instantly on and off. Processors with dual cores two brains will handle intense tasks such as transcoding from one video format to another.

Apjit Walia, semiconductor analyst at RBC Capital Markets, said: “It`s new territory, but if they can replicate the drive that they developed for Centrino, it could be a fairly lucrative venture for them, although the technology really has to support it.” Viiv will be backed up by a marketing campaign comparable with the $300m spent on Centrino`s launch. The name was suggested by a branding company who found in testing that it appealed to consumers.