After some rumblings in March of this year that Intel (NASDAQ:INTC) was looking to launch an online TV streaming service made possible by its processors, TechCrunch is now rekindling the speculative flames of the chip giant's foray into the living room.
Just a week away?
Rumor has it that Intel is preparing to launch a virtual cable TV service alongside a new set-top box, or STB. The Consumer Electronics Show, or CES, is just around the corner in January, and Intel is supposedly going to unveil its newest creation at its event on Jan. 7. In order to clear the tough licensing hurdle, the company will roll out service by cities instead of nationally. That eases concerns from content providers that don't want to rock the boat too much with incumbent cable providers.
The rumored service would hope to offer the best of both worlds: traditional cable channels as well as online content like Coinstar's (NASDAQ:OUTR) forthcoming Redbox streaming service.
All that and a bag of chips
Of course, Intel's play is to sell more chips, even though STB businesses don't typically translate into high unit volumes. The move is even more interesting since it comes just over a year after Intel shuttered its Digital Home Group that was previously tasked with offerings such as smart TV processors. At that point, it seemed that Intel was content throwing in the TV towel to the ARM Holdings (NASDAQ:ARMH) army.
Google (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL) are among the tech giants currently vying for dominance among couch potatoes. Google's first-generation Google TV was powered by Intel's x86 chips, but the second generation models went to Marvell Technology (NASDAQ:MRVL) and its Armada 1500 processor.
Meanwhile, Apple continues to put its A-chips into as many of its products as possible, and its Apple TV STB is no exception. For example, the newest third-generation Apple TV STB is powered by a single-core A5 processor, which is actually the same dual-core A5 used in the A5 but with one core disabled. This particular chip also happened to be Apple's test drive of Samsung's 32-nanometer manufacturing process before transitioning the current A6 to that same node. Still, the point is that this seat is taken, and Intel has little chance of scoring an Apple TV win.
That gives Intel very little exposure to today's popular STBs. Even the Roku streaming STBs feature ARM chips from Broadcom (UNKNOWN:BRCM.DL). However, Intel has chips in other cable networking gear from service providers, including things like cable modems.
What about Big G?
As far as Google TV goes, TechCrunch's sources say that Intel is a tad peeved that OEMs are doing a... let's say less-than-perfect job so it wants to "do it right." That could be a knock on everyone from LG, Sony (NYSE:SNE), and Vizio as the current providers of Google TV gear, to app developers -- even to Google itself.
Google has changed its strategic stance in its characteristically experimental ways. Logitech (NASDAQ:LOGI) bore most of the burden of the first-generation Google TV flop, the Revue STB (which carried an Intel Atom processor inside). Even after Google has optimized Android for x86 architecture, giving Intel a chance at mobile, the pair isn't taking their relationship to the next level with TV.
More trouble than it's worth?
TV is about the last thing that most investors would think of as an Intel business. In some ways, that's good for Intel's ability to negotiate with content providers since the chip maker doesn't have as much sway on consumer electronics trends as Google or Apple. Content gatekeepers may be willing to experiment more with what they perceive as a smaller player in the sector, but that doesn't negate the disruptive potential of the deal.
It's also a bit curious that Intel is pursuing a lower margin and lower unit business. The going price for competing stand-alone STBs is about $100, in part because ARM chips have pricing advantages compared to Intel silicon. Seems like an awful lot of work to set up an entire subscription service and hardware sales just to sell some chips.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple, Google, Intel, and Logitech International and is short Sony and has the following options: long JAN 2013 $22.00 calls on Sony. Motley Fool newsletter services recommend Apple, Google, Intel, and Logitech International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.