Intel Buys Video Technology, Patents From RealNetworks

The $120 million Intel will spend to buy RealNetworks' video codec software and 190-plus patents will enable the company to grow the video capabilities of it chips.

Intel officials are looking to bolster the multimedia capabilities of its chips by buying video software and a host of patents from RealNetworks.

In the deal announced Jan. 26, the giant chip maker said it will spend $120 million to buy RealNetworks' next-generation video codec software as well as 190 patents and 170 patent applications, including what Intel calls RealNetworks' "foundational streaming media patents."

The agreement marks the latest move by Intel to widen the capabilities that it is bringing to its upcoming processors, particularly those that are targeted for mobile devices such as smartphones, tablets and ultrabooks, which are very thin and light notebooks.

Intel officials for more than a year have touted their plans to move beyond simply making processors, and instead are creating systems-on-a-chip (SoCs) that offer everything from high-end multimedia capabilities to hardware-based security features. To that end, Intel has acquired specially targeted companies, such as security software maker McAfee for $7.68 billion in a deal that closed last year.

Intel is readying its first SoC, an Atom processor dubbed "Medfield," that will appear in smartphones and tablets this year. It's the next step in Intel's aggressive push into the booming mobile device space, which currently is dominated by chips designed by ARM Holdings and manufactured by the likes of Qualcomm, Nvidia, Samsung Electronics and Texas Instruments.

The chip maker also is growing the graphics capabilities of its Core desktop and notebook processors; Intel's upcoming 22-nanometer "Ivy Bridge" chips will be the company's first to support Microsoft's DirectX 11 graphics technology, something that rival Advanced Micro Devices already offers integrated on its processors.

The Ivy Bridge chips will not only run in traditional desktops and notebooks, but also ultrabooks, which are very thin and light notebooks that offer the same capabilities of traditional laptops as well as features found in tablets, such as long battery life, instant-on capabilities and, eventually, touch screens.

OEMs such as Hewlett-Packard, Acer, Asus and Lenovo already have introduced first-generation ultrabooks, and more are expected to hit the market based on the Ivy Bridge chips.

In a statement, Intel officials said the technology and patents they are buying from RealNetworks will expand "Intel's diverse and extensive portfolio of intellectual property. The acquisition also enhances our ability to continue to offer richer experiences and innovative solutions to end users across a wide spectrum of devices, including through Ultrabook devices, smartphones and digital media."

According to the deal, RealNetworks will retain certain rights to use the patents in current and future products.

"Selling these patents to Intel unlocks some of the substantial and unrealized value of RealNetworks assets," Thomas Nielsen, RealNetworks' president and CEO, said in a statement. "It represents an extraordinary opportunity for us to generate additional capital to boost investments in new businesses and markets while still protecting our existing business."