Intel Corp. and Verizon Communications on Tuesday announced an agreement for Verizon to purchase the assets of Intel Media, a business division dedicated to the development of cloud TV products and services. The transaction will accelerate the availability of next-generation video services, both integrated with Verizon FiOS fiber-optic networks and delivered "over the top" to any device.
Once the transaction is closed, Verizon expects to integrate IP-based TV services with FiOS video to further differentiate FiOS from traditional cable TV offerings and to reduce ongoing deployment costs. FiOS customers are also expected to benefit from elegant search and discovery, interactivity and cross-screen ease of use – integrated with the Verizon wireless 4G/LTE network.
Verizon will purchase intellectual property rights and other assets that enable Intel's OnCue Cloud TV platform. Verizon will also make employment offers to substantially all of the approximately 350-person Intel unit, which will continue to be based in Santa Clara, California, and be led by its current management team.
"We're incredibly proud of what we've achieved. 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. It's the next logical step, and we're excited about the road ahead," said Erik Huggers, corporate vice president and general manager of Intel Media.
The base of Intel’s smart Internet TV service was expected to be a set-top-box powered by a specially-designed Intel system-on-chip that was supposed to be equipped with a camera to recognize the users and provide them relevant programs or services. The STB was expected to provide live television, a collection of programs and TV-shows aired in the past, video rental service as well as other services. All-in-all, Intel wanted to create a convenient all-in-one solution.
Combined with Verizon's current and recently announced new video-delivery capabilities, the transaction also provides the platform and skill sets for Verizon to continue to expand the depth, breadth and scope of its video offerings, including mobile, in the future.
In December, Verizon announced a definitive agreement to acquire EdgeCast, an industry leader in content delivery networks. Also in fourth-quarter 2013, Verizon announced the acquisition of upLynk's exclusive technology that streamlines the process of uploading and encoding of video for live, linear and video-on-demand content.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to close early in the first quarter of 2014. Terms of the transaction were not disclosed.
Andy Grove, a co-founder and a former chief executive of Intel, once said in his book “Only Paranoid Survive” that when technology companies make it into non-core businesses, they rather distract attention from their failures in the core business than create new significant revenue streams. Intel has clearly missed a number of ultra-mobile opportunities, which were within its core competence, under the previous chief exec, who then initiated a pet TV project. The new CEO wants to concentrate on what Intel does best: develop and produce leading-edge microprocessors for every application possible.