Intel is officially out of the Internet TV business.
After months of predictions and rumors, Verizon Communications has agreed to buy Intel’s OnCue cloud television unit, a business that had fallen out of favor after Brian Krzanich took over as CEO of the giant chip maker in May 2013.
The two companies announced the deal Jan. 21, though no financial details were released. The acquisition is expected to close early in the first quarter. Verizon will get the intellectual property rights and all the technology that enables the OnCue Cloud TV platform, and will offer employment to the about 350 employees of the Intel Media division.
Krzanich praised the innovative technologies developed by the Intel Media group, and said they will help Verizon as the wireless company looks to expand its reach. The deal also will enable Intel to continue focusing on areas that the CEO said is most important to the chip vendor.
“The critical factor in gaining efficient access to content is based on your ability to scale quickly in subscribers and end users, which is why selling these assets to Verizon makes perfect sense, with its millions of FiOS network and wireless customers,” he said in a statement. “This sale also enables Intel to further align our focus and resources around advancing our broad computing product portfolio in segments ranging from the Internet-of-Things to data centers.”
Like many other tech vendors, Intel has been hit by the significant slowdown in global PC sales over the past couple of years as more consumer money is spent on tablets and smartphones. The chip maker has been roundly criticized for being slow in responding to the rise of mobile devices, most of which are powered by systems-on-a-chip (SoCs) designed by ARM and made by the likes of Samsung, Qualcomm and Texas Instruments.
Intel officials are driving down the power consumption of the company’s Atom platform and Core processors, using them as the basis for its efforts in smartphones, tablets, PCs and new form factors, such as all-in-ones and 2-in-1 systems, which can be used as both a tablet and a notebook. Intel also has created a new family of chips, called Quark, which are small and more power efficient than Atom SoCs and are aimed at the Internet of things (IoT) and wearable computing devices.
Intel to Sell Internet TV Biz to Verizon
Intel’s TV efforts were born more than two years ago out of former CEO Paul Otellini’s desire to expand the vendor’s reach beyond its core PC and server businesses. Intel officials in early 2013 said the business would launch later in the year, despite reports of problems the company was having securing content to stream from programmers.
After taking over as CEO, Krzanich’s approach to the streaming TV initiative was tepid, telling Reuters in June 2013 that Intel engineers are “experts in silicon, we’re experts in mobility, in driving Moore’s law. But we are not experts in the content industry, and we’re being careful.”
Erik Huggers, a former British Broadcasting Corp. executive hired by Intel to run the cloud TV unit, said the sale to Verizon was “the next logical step.”
“Intel provided us with the technological know-how and resources to develop products and services that will fundamentally change the way we experience TV, and now Verizon gives us access to the marketplace and the ability to scale,” said Huggers, corporate vice president and general manager of Intel Media.
Reports have been circulating for months that Verizon was interested in buying Intel’s business. In a statement, Verizon Chairman and CEO Lowell McAdam said that the deal “will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it. Verizon already has extensive video content relationships, fixed and wireless delivery networks, and customer relationships in both the home and on mobile. This transaction provides us with the capabilities to build a powerful, capitally efficient engine for future growth and innovation.”
The deal was announced the same day Verizon announced fourth-quarter revenues of $31.1 billion, a 3.4 percent increase over the same period in 2012 thanks to growth in its broadband and mobile businesses.
It also comes less than a week after Intel officials announced the company will cut 5 percent of its workforce—about 5,000 jobs—after a so-so fourth quarter and a forecast of flat revenues for 2014.