Intel Wants Its Cake Both Ways

At a recent trade show in Japan, a senior Intel (NASDAQ:INTC) executive praised newfound partner Apple (NASDAQ:AAPL) for its consumer-friendly, proprietary entertainment platform. Then he turned right around and prayed for Japanese electronics manufacturers to support the open standards of Intel's Viiv entertainment platform -- which is notably incompatible with iPods and iTunes. Want another cake while you're eating this one, Intel?

"Let Apple be Apple," said Eric Kim, senior VP of Intel's home entertainment group. The fact that Steve Jobs and his merry men have a virtual stranglehold on the digital music market can inspire its partners to forgive many a flaw, like a tightly locked-down media format that won't work with anybody else's hardware until Apple decides to loosen up a bit and start selling third-party licenses. Even Intel, provider of the chips powering today's Macs, doesn't have the right to sell gadgets or software that can play your iTunes downloads, and the chipmaker seems OK with that.

On the other hand, Intel wants everyone else to genuflect to its majesty as it hopes to grow the Viiv platform beyond the personal computer and into set-top boxes and portable devices. If Sony (NYSE:SNE), Toshiba, and Panasonic want to sell networked entertainment systems, they should do so to Intel's specifications, goshdarnit. Viiv is a mishmash of guidelines using Intel's hardware and Microsoft's (NASDAQ:MSFT) software to create a media delivery framework that can stream your favorite shows, songs, or movies to any screen in your house, and Intel hopes that it will become the de facto standard for such home entertainment networks in the future.

But it's up against Microsoft's own media center efforts, centered around the Xbox 360, as well as AMD (NYSE:AMD) Live! and the forthcoming media hub from Sony masquerading as a gaming console called PlayStation 3. And industry observers have been expecting Apple's version of the same idea for many moons now. Maybe even TiVo (NASDAQ:TIVO) has a trick or two up its sleeve.

I'm a big fan of open standards myself, and would be happy to see Apple's closed platform opened up so I could buy songs through iTunes and play them on my Creative (NASDAQ:CREAF) Zen media player. Intel is in a position to push Apple into licensing its FairPlay digital rights management scheme to Viiv devices. Giving Apple a free pass while everyone else is supposed to get in line makes Intel look like a wishy-washy turncoat that doesn't really believe in its own product.

"At the end of the day, consumers want choice," Kim said. But no matter what they choose, Intel wants to be a part of the solution. The upcoming -- some would say it's already underway -- battle for home entertainment supremacy doesn't have a clear-cut winner yet, so the company is hedging its bets. But the day will come when it will have to choose one side or the other, even if it means upsetting new friends or longtime partners. Which will it be, Intel: open or closed? Standardized or proprietary? Chocolate or strawberry?

Further Foolishness:

• Intel has declared war.
• We've held Foolish duels over both Intel and AMD lately.
• Fellow Fool Tim Beyers even ran a head-to-head comparison.
• Anders did the same back in May. See what's changed since then.

Intel and Microsoft are Inside Value picks. Intel is also a Stock Advisor selection, as is TiVo. Try a 30-day free trial to one of our services today for more fun and profit.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, though he wants many of their gadgets. You can check out Anders' holdings if you like, or check the CAPS community's feelings about Intel. Foolish disclosure is never wishy-washy.