Inside Intel’s TV service: No CES announcement, but plenty of juicy details

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Both Forbes and TechCrunch reported this past weekend that Intel may announce its much-rumored TV service at CES next week. I’ve been told by a knowledgeable source that this is inaccurate, and that there won’t be any announcement or other kind of public appearance in Vegas.

Still, Intel is definitely getting close to lifting the curtain on its plans for the living room. I’ve been talking to sources familiar with the project for a few months now, and done a fair share of digging online as well. Combined with a few previous leaks, a much clearer picture about what Intel is up to in the TV space is emerging: it’s a box, it’s a service, and it’s intriguing, to say the least.

It’s top-secret… but not for much longer

Intel Media's office building may not look like much, but sources have told me that the company is trying to recreate a startup atmosphere inside.

Intel Media’s office building may not look like much, but sources have told me that the company is trying to recreate a startup atmosphere inside.

Intel has been building its secret new TV platform inside a nondescript office building tucked away between two parking structures in a corner of the Intel Campus in Santa Clara, California. From the outside, it looks like any other building on the chip maker’s campus.

But I’ve been told by multiple sources with knowledge of the project that the things going on in the building are anything but dusty old Intel. The project, which has been dubbed Intel Media, is run like a startup in stealth mode.

Intel Media is overseen by a separate board, which includes Intel CEO Paul Otellini as well as Intel Media’s content head Eric Free. There has even been talk of spinning off Intel Media into a separate corporate entity. Intel Media boss Erik Huggers, who previously led the BBC’s iPlayer efforts, apparently prefers to hire outsiders over Intel veterans, and most people at Intel have no clue what’s going on in the building.

That may change soon. Even without any CES announcements, it looks like Intel is getting ready to finally unveil what it’s been working on. Forbes also reported that limited beta tests of the service are going to start in March, and Huggers is scheduled to talk at AllThingsD’s media conference in February, where he presumably has to give at least some kind of sneak peek.

It’s a box… and so much more

Intel media's retail efforts are driven by the dsame guy who brought Jawbone's Jambox to Best Buy and Walmart.

Intel Media’s retail efforts are driven by the same guy who brought Jawbone’s Jambox to Best Buy and Walmart.

At the center of Intel’s efforts is a set-top box manufactured by Intel and possibly Intel-branded as well. The device will be sold on Intel’s website as well as through retail partners. Intel Media has hired Sean Ludick, who helped Jawbone to get its speakers and headsets into the stores of retail giants like Best Buy, Costco and Walmart. Ludick is now is in charge of doing the same for Intel’s TV box.

Of course, Intel’s box will compete with a plethora of other devices at these stores, none of which are selling particularly well. That’s where Courtnee Westendorf comes in. Westendorf worked more than a decade at Apple, where she managed global marketing for the iPhone and iPod. Now, she is head of marketing for Intel Media.

But Intel Media won’t be just about that one single box. The company’s goal is to deliver its video service to all screens, including tablets, PCs and mobile phones.

That will likely include an ambitious licensing play to secure content across all of these devices. Intel’s set-top box will offer access to third-party apps, but also TV content licensed by Intel — something that has been one of the key challenges of the project. Reuters and the Wall Street Journal detailed earlier this year how the company wanted to secure the right to stream individual TV channels over the internet, and Forbes reported this weekend that it will offer consumers the ability to subscribe to individual channels, as opposed to a big and expensive cable bundle. I’m still skeptical about that last part, but we should soon know more.

It wants to beat Apple TV… without being Apple TV

Intel Media executives believe Apple got it all wrong.

Intel Media executives believe Apple got it all wrong.

Intel has made numerous attempts to capture the living room, most recently with its CE4100 chipset, which powered first-generation Google TV devices as well as the Boxee Box. Google TV’s first devices were largely ignored by consumers, and Intel wants to get it right this time around.

But Intel doesn’t want to just build a better Google TV. It wants to dethrone Apple TV, the de facto leader in the market for video streaming devices. Apple executives have long called the current-generation Apple TV a hobby, but the company nonetheless managed to sell five million units in its fiscal FY 2012. However Intel Media executives think that Apple simply isn’t doing it right with its current-generation TV product, I was told by a source.

One example: Apple TV currently offers a combination of VOD and apps, forcing users to make active choices about their TV viewing and making them browse through catalogs of media before they’re able to watch anything. Intel Media boss Erik Huggers, in particular, dislikes this approach, and wants to replace it with a broadcast-like approach of curated channels that require a minimum of interaction. Think Pandora, not Spotify.

It’s developed in California… and London

Much of the UI design for Intel's TV product has been driven by a group of designers that incorporated as W12 Studios this year.

Much of the UI design for Intel’s TV product has been driven by a group of designers that incorporated as W12 Studios this year.

Huggers is known to have strong opinions about user experience, and has gone on the record saying that the user experience of many existing TV services is “absolutely dreadful, completely awful.” He has also been vocal about the power of small teams. One of his inspirations for Intel Media has been Free, the French telco disruptor that built its own IPTV set-top box with a staff of 20 engineers. Those two reasons explain why Huggers has quasi-outsourced the UI design of the Intel TV product to a small team of star designers in London, which incorporated under the name W12 Studios earlier this year.

The team includes a number of people who worked on the BBC iPlayer, and many were previously at key agencies like IDEO, frog design, Method, Schematic and Fjord. “The people that I’ve been able to attract I know very well, because they worked in my organization,” Huggers said in 2011. “These are the guys that have designed industry award-winning services across television, telephone, tablets, PCs.”

The W12 Studios team has taken multiple trips to Santa Clara while working on the project. During that time, the design underwent a number of iterations. I’ve heard that one version looked a bit like Apple’s Cover Flow, while another incarnation has been described to me as having the look and feel of the tile design at the center of Windows 8.

It’s a big bet on Intel’s future… which is uncertain

Intel CEO Paul Otellini has been key to the company's TV initiative. But with him leaving in May, what will the future hold for Intel Media?

Intel CEO Paul Otellini has been key to the company’s TV initiative. But with him leaving in May, what will the future hold for Intel Media?

One source told me that as of six months ago, Intel had already spent $100 million on these efforts. Another estimated that the total spent on these efforts could end up being an order of magnitude higher. That’s real money, even for someone like Intel — and it shows how serious the company is making this new foray into the TV space. That’s because for Intel, it’s not just about capturing the living room. It’s about redefining its own DNA to be prepared for a post-silicon future.

Otellini has long been talking about his desire to embrace services as the future of Intel. The company’s TV service could become a key blueprint for these efforts, for a future in which Intel sells goods and services directly to consumers, as opposed to just powering devices made by others. That motivation was a big reason Otellini brought Huggers on board. Here’s how Huggers recalled his job interview with Otellini:

“I don’t know anything about silicon. Zero. And I told him that. He said: ‘That’s exactly what we need. We need someone who doesn’t understand silicon. We need someone who has launched services, who has worked in a content environment, and who can help bridge that gap.”

It’s worth pointing out that this move towards services has been championed by Otellini, who is going to retire in May. The question is whether his yet-to-be-named successor will share the same vision for Intel’s future, and whether he will give Intel Media a fair chance even if consumers don’t bite right away.

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