Intel Pulls The Plug On TV Plans

After a much-ballyhooed speech by Intel President Paul Otellini in Las Vegas last January, touting its then-forthcoming LCOS processor for wide-screen TVs, the company looked at the market, the cost to produce the chip and its return on investment possibilities. An Intel spokeswoman, in an e-mail, put it this way:

You probably heard us talk last week about our focus on multi-core products and the platform technologies. When weighing things like LCOS and the investment and ROI needed, it makes more sense for us to focus on these other areas of higher return. Our decision was focused on ROI and priorities.

It's unclear how the digital home still fits into Intel's priorities. With average selling prices (ASPs) on server, desktop and notebook chips under pressure, and a commercial market that's growing but still has potential to be fickle, Intel looked at the digital home as a no-brainer. Instead of a computer in every home, the company believed a clear path to growth existed in a computer-in-every-room business model. Or two computers in every room. Or three. Every stereo would have Intel inside. Every speaker would have it. Every television would have it.

They all still may. Intel is looking at a strategy of producing dual-core and multi-core processors as its new path to growth and success. The possibility of an entertainment PC with dual-core capability--and the ability to process audio, video, graphics and more at higher performance than ever--is still realistic.

And Intel, though the giant of the industry, found itself swept up in a global oversupply of chips during the second and third quarter of 2004 that forced it to retrench. That move, while hurting Intel and other chip stocks, is beginning to be viewed positively.

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This morning, Smith Barney issued a report (registration required) saying it was increasing its ratings on 15 semiconductor stocks, including Intel.

So while Intel has killed its efforts at building a 4GHz Pentium 4 processor, as well as its LCOS chip for TVs, that industry's overall pullback in capital spending is actually a good thing for the market, according to Smith Barney. It may also be a good thing for legacy home integrators, who worried that an Intel slash-and-burn pricing strategy in the digital home could hurt their businesses.

How the Santa Clara, Calif.-based chip maker announced its decision on LCOS, and how it has left that impression with the market, may be another topic entirely.

Blogger B. Greenway, at HomeTheaterBlog.com, reports: