Today Verizon and Intel announced that Verizon will purchase the assets of Intel Media, the group that created what was disclosed today as the “OnCue” set top box and services. While I am disappointed that Intel didn’t take this fully to market, I do believe this could be a huge opportunity for Verizon if they play their cards right.
First of all, there is a market need for big change in TV content. Let’s start with the user experience. Today it stinks, plain as that, and everyone knows it. Today, if consumers want live TV, they need to subscribe to inflexible content packages and use hardware that looks and acts as if it were architected in the 90’s. It’s slow and noisy, it’s hard to find content and there certainly aren’t any convenient linkages to Netflix or Hulu+.
A few months back, I got an exclusive opportunity to test the device and service now known as OnCue. In the past, I have tested literally 50 different connected TV devices going all the way back to NTSC converters from a PC to TV on up through Roku, Apple TV and the Xbox One. Frankly, OnCue blew me away. It was fast, real fast in changing live TV content, rewinding, skipping forward… everything was fast. It had one channel guide for live, over the top, premium movies, and recorded TV and was very responsive. It all makes so much sense.
Consumers care about the content first, where they get it second. It’s as simple as that. Erik Huggers and the Intel Media should feel great about their accomplishments.
There have been some reports that Intel didn’t have all the content they needed to bring a compelling offering to the table and the product didn’t move ahead because of that. This is not accurate. Sources shared with me the content that was secured and what was not. My calculation says that they had 90% of what major cable operators have today, and like Google Fiber, once the service started, they would have filled in that remaining 10%.
One thing that Verizon immediately brings to the table is that 10% of the TV content that can be used at launch. It’s estimated that Verizon already spends billions on TV content today, so content investment and scale in TV content won’t be a challenge. So Verizon brings in their experience, scale and longevity in TV content and Intel Media brings the same in OTT content. Verizon’s previous acquisition, EdgeCast, will also certainly play a role in the back-end of OnCue’s service. For the sake of the consumers, I hope it is a fast as Intel’s Amazon back-end.
What does this mean for Intel? I think will be a very long time before we will see an Intel-branded consumer product, and that’s driven from the top of the company. Intel has also changed their mobile strategy too, to stop selling turn-key phone solutions to carriers like Orange or phone brands like Lava and focus on the largest phone brands. That’s not necessarily a bad move, unless, of course, you are having a very hard time getting into a specific market sector without success, and you need to go vertical. I internalize that as Intel making the decision to walk away from markets where their core silicon and software aren’t delivering the winning value proposition.
Another thing to point out is IP. I was very glad to see that Intel, unlike AMD, kept the core silicon and silicon enabling software when they sold the business. A cash-strapped AMD short-sightedly sold its successful low power smartphone graphics IP to Qualcomm (now known as Adreno) and set-top box IP to Broadcom and have to be rethinking that decision.
The living room opportunity isn’t evaporating in the next 5 to 10 years, and we should all be interested in Intel’s next steps there as they just jettisoned their best opportunity to date. The future of living room computing will transform itself into into a myriad of possible combinations of the set top box, over the top box (like OnCue), the conditional-access router, the SmartTV and the PC, and it’s only clear where Intel plays in PCs. One thing for certain is that Verizon acquired a good asset and a good team, and I think if they don’t meddle too much with the OnCue team and process, will pay off big-time for them.