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Intel Still Targeting 'Smart TV' Despite Early Snags

By Shara Tibken Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Intel Corp. (INTC) continues to target Internet-connected television sets to fuel its growth, even as initial attempts to popularize Web searching on TV sets are experiencing snags. The Santa Clara, Calif.-based chip giant has partnered with Google Inc. (GOOG) in the development of Google TV, which allows users to search and access the full Web via TV sets and set-top boxes. The goal is to let users see a host of new material, like shows posted online by networks and amateur videos, on their televisions. Intel is also taking its television efforts beyond Google TV. Using the "Smart TV" moniker, the chip maker is working with hardware and software companies to create a range of Internet-connected televisions and set-top boxes--technology expected to generate buzz at the Consumer Electronics Show in Las Vegas in January. "Everything is coming together to create a perfect storm," said Wilfred Martis, general manager for retail consumer electronics in Intel's digital home group. "It's really going to enhance the TV viewing experience." Intel's optimism about Smart TV comes as early versions of Google TV meet with tepid reviews. Some popular content providers, including Hulu, have blocked their programs from those devices, which are made by Sony Corp. (SNE, 6758.TO) and Logitech International SA (LOGI). Hulu is partly owned by News Corp. (NWS), which also owns this wire service and The Wall Street Journal. The lukewarm reception of Google TV has prompted the Mountain View, Calif.-based Internet giant to ask some TV-set makers to delay announcing hardware based on its software, according to The Wall Street Journal. A Google spokesperson said the company is happy with the launch of Google TV and its "long-term goal is to collaborate with a broad community of consumer electronics manufacturers." An Intel spokesman said Google's difficulties don't affect the chip maker's focus on the nascent field and the relationship between the companies is strong. The spread of broadband Internet, improved screen resolution and more sophisticated Internet content augur well for TV-based Web surfing, Martis said. Consumers are also more comfortable using devices other than the computer to access the Internet, a trend he sees extending to televisions. "We want to go win some of those other sexy screens that have entered consumers' lives," Martis said. "Smart TV happens to be one of them." Analysts say it is unclear how strong demand is for products that allow Web-surfing over televisions. They say many consumers are confused by the technology and the choices that will be available. Some say consumers want to watch their televisions, not interact with them. "It's really a chaotic marketplace right now," IDC analyst Michael Palma said. "People are waiting to see what platforms take off." The strategy taken by Intel and Google--allowing full access to the Web via TV sets--isn't the only approach to Web-connected television. Boxes from Apple Inc. (AAPL), hard-disk drive maker Western Digital Corp. (WDC) and other companies allow users to access some streaming sites, like Netflix Inc. (NFLX), but not the whole Web. "It needs to be focused," said Jim Welsh, general manager of Western Digital's branded products group, of Internet TVs and boxes. If the devices are too complicated, people will get overwhelmed, he added. Still, Martis says Intel will be able to carve out a place in what he sees as a fast-growing market. Internet-connected television sets could be mainstream in the U.S. next year and world-wide in as a little as four years, Martis said. He expects Google TV and other Smart TVs to garner more excitement as applications become available from places like the Android Market, Google's online store for downloadable software, and Intel's AppUp store. "We think [TV] has become an application platform," Martis said. "Going forward it will be all about software." -By Shara Tibken, Dow Jones Newswires; 212-416-2189; (Don Clark contributed to this report.)

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