Intel TV Efforts Spiked by CEO Krzanich: Report

CEO Brian Krzanich saw Intel's TV initiative as an expensive distraction to the company's mobile efforts, according to a report by Reuters.

The three retail stores Intel is opening for the holiday season reportedly intended to host the coming-out party for Intel's ambitious Internet TV effort.

Instead, the Intel Experience Stores in New York City, Chicago and Venice, Calif., will show off notebooks, tablets, two-in-one systems and other devices powered by Intel technology.

The change comes after Intel CEO Brian Krzanich, who took over the top job from Paul Otellini in May, spiked the initiative, believing that the chip maker had more important priorities—such as pushing ahead with its mobile device plans—and could be distracted by the expensive TV program, according to a report in Reuters.

Intel's TV initiative was a two-year effort begun under Otellini, who was looking for ways for the company to diversify. The idea was to create an Intel-powered set-top box that would allow consumers to stream TV shows, on-demand content, live events and other services into their televisions and other devices via the Internet. The idea was to let users order and pay for whatever shows they wanted, without having to pay for content and channels they didn't want.

The strategy not only would have Intel branching out into an entirely new market, but it also would mean putting it into direct competition with established cable and satellite media companies like Dish, DirecTV and Time Warner Cable. There also are a range of other tech vendors—from Google to Apple to Sony—that are rumored to be mulling an Internet TV service.

Intel officials in early 2013 said they expected to have the service—called OnCue—up and running by the end of this year. The chip maker already was testing the service with thousands of Intel employees who were using it in their homes.

However, there were consistent reports that Intel was having trouble securing deals with TV programmers for contents, and the company reportedly was turning to Samsung (with its smart TVs) and Amazon (and its massive base of Internet users and growing Internet video capabilities) for help.

It also was a matter of money. According to sources cited by Reuters, Erik Huggers, a former British Broadcasting Corp. executive hired to head up the effort, had come close to completing deals with some TV programmers, but that up-front costs would have cost hundreds of millions of dollars, even if adoption of the OnCue service was slow.

Now Intel reportedly is negotiating with Verizon Communications to take over OnCue. In addition, reports surfaced this month that the chip maker is talking with Liberty Global, a London-based cable company with operations throughout Europe.

According to Reuters, at its height, Intel Media had about 300 employees and people who saw a prototype of the set-top box with its GUI were impressed, saying it was "far superior" to what is offered by cable and satellite TV companies.

Like most tech vendors with ties to the PC market, Intel has been hit hard by the decline in PC sales worldwide. The company is looking to extend its reach in several directions, with the mobile device space having the highest priority. Krzanich—who is scheduled to speak Nov. 21 at the company's annual investor meeting—has lamented Intel's slow response in delivering chips for smartphones and tablets, most of which run on chips designed by ARM and made by Samsung, Qualcomm and other manufacturers. Soon after taking over from Otellini, Krzanich said the company was ramping up its efforts in the space, and giving the development of its low-power Atom platform greater priority in the company's fabrication facilities.

He also quickly took a much more cautious approach to Intel's TV initiative, telling Reuters in an interview in June that the company would play to its strengths.

"We're experts in silicon, we're experts in mobility, in driving Moore's law," he said. "But we are not experts in the content industry, and we're being careful."