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Intel abandons cloud TV service plans, sells assets to Verizon

In a bid to diversify its business and create a new market for its chips, Intel Corp. decided to design a special cloud TV service that would rely exclusively on its own set-to-box. Over time it became obvious that media business is not Intel’s strong side and on Tuesday the company announced that it would sell appropriate unit to Verizon Communications.

Once the business deal is closed, Verizon anticipates to incorporate IP-based TV services with FiOS video to further differentiate FiOS from contemporary cable TV offerings and to decrease enduring deployment costs. FiOS customers are also projected to take advantage of advanced search and discovery, interactivity and cross-screen ease of use – integrated with the Verizon Wireless 4G/LTE network. The deal will speed up the availability of next-generation video services, both integrated with Verizon FiOS fiber-optic networks and delivered “over the top” to any device.

Verizon will acquire intellectual property rights and other assets that power 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 and be led by its current management team. It is unclear whether Verizon will use Intel-developed set-top-boxes now or in the future.

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Intel’s decision to get rid of its media business seems to be a little sad. But at the same time, remains a completely logical thing to do. Verizon already has customers, content, network and a lot of other assets needed for a successful cloud TV service. By contrast, Intel only had technologies and it could take years before its OnCue platform would become popular.

“We’re incredibly proud of what we’ve achieved,” Erik Huggers, corporate vice president and general manager of Intel Media. “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.”

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.

KitGuru Says: The world’s largest chipmaker is facing tremendous changes on the market these days. In a bid to successfully overcome the challenges and transform itself, Intel needs to concentrate on the most important things. Clearly, a media business unit is not a core business for the company.

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