Intel is to scrap its streaming media unit, less than a year after opening up for business. The 200 employees of Intel Internet Media Services will be offered jobs within the company.

Last May, Intel announced its intention to grab a flat slice of the streaming media market. The chip giant said it would spend a couple of hundred million bucks to build its position in streaming media, a market it reckoned would generate $2.5bn revenues in 2004.

In an interview with Reuters, Intel spokesman Bill Calder said: "There just aren't as many customers and as many opportunities. That's not to say it won't develop, but it's over a longer period than we had anticipated." The company will work with other streaming media suppliers instead.

In its core business Intel is used to 80 per cent+ market share and gross margins in the high fifties to low sixties. The company wants to broaden its revenue base, but it's going to have a hell of a time finding a new sector that it can dominate and deliver those kind of margins. ®

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