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Intel’s OnCue: an autopsy

There may have been no one more skeptical of Intel’s content efforts than me. As I wrote on the last day of 2012,

I couldn’t help but be a little skeptical. After all, Intel has been trying very hard over the past decade or more to make sure they stay relevant in the post-PC age, starting way before Viiv and perhaps most notably with the company’s prolonged mobile push. But like Microsoft, Intel has struggled to move beyond the PC, and I’m not too confident that this new effort aimed at our living room will succeed.

Basically, I’d seen this story before. I knew the company had tried but had never been able to make the transition from silicon provider to an end-user technology and services company despite many efforts over the past decade.

Despite all my skepticism, it’s still worth analyzing a bit what transpired. I think Janko’s post does a good job of pointing out that a change in the upper management – Intel’s CEO Paul Otellini retired in May of last year and Brian Krzanich took over – really was the biggest reason the company abandoned the effort.  In short, Otellini saw a future for Intel in services, while Krzanich thought the company should stick to its knitting.

The result was a reported $200 million sale to Verizon, who plans to use the technology to launch an over-the-top video service and possibly more (again, covered well by Janko).

So was it the right call? I think you know my answer, but here’s some specific reasons why it was smart for the company to abandon OnCue:

  • Intel may have made surprising progress in negotiating content rights, but that didn’t mean they would not be a me-too service. Other companies with better success and creating digital content subscriptions are going to continue to push into this market, and what makes  Intel think it would be any better at it?
  • Intel didn’t own any end-customer relationships like Verizon or Comcast. Being able to build a wholly new business reliant on acquiring tens of millions of households would require billions of dollars in marketing for customer acquisition, which is on top of the billions probably needed for content rights.
  • The company continues to struggle in the post-PC world, as mobile device makers generally favor ARM architecture over power-sucking Intel processors. Was diverging into content really a smart idea given the company’s continued struggles?

In that end, I understand the allure of the digital living room and the company’s foray into content. I also think they made the right decision by exiting.

Being curious about a new and unrelated market is forgivable. Creating a huge distraction and money-sink for the company while it tries to adjust in its core markets is not.