Intel coughs up for the Digital Home

Intel is to invest $200 million in companies creating technologies to digitise the home.

The cash will come from the California-based company's venture capital arm, Intel Capital, one of the largest venture capital houses in the world. Money from the "Digital Home Fund" will be doled out to start-ups and young businesses over the next three to four years.

Intel is a long-time proponent of the so-called "Digital Home," and its announcement comes on the eve of the annual Consumer Electronics Show in Las Vegas, at which Intel and Microsoft are expected to launch new technologies and initiatives that will promote the PC as the centre of home entertainment. The move is the first step in what some regard as the future of home entertainment, whereby TV, stereos, portable music players, DVD players and perhaps even household appliances will all be linked -- with wireless connections -- and managed through the home PC.

Already talk has begun to spread that Intel, as well as rival chipmaker Motorola, is looking to make microchips to run high-definition digital TVs, and other video devices that would be dependant on a high-speed data network. More details about the strategy are expected to be part of Intel president and COO Paul Otellini's presentation at the CES.

Meanwhile, Dell and other hardware makes have already begun to manufacture and sell TVs that double as computer monitors, and last year the Texas based company launched a portable music player and software to manage audio and video content. HP, Gateway and a slew of other traditional computer makers have, over the last several months, been moving deeper into the consumer electronics (CE) business.

But Intel, the clear leader in the PC microprocessor market, has struggled in other areas, most notably communications. In December the firm said that it anticipated a $600 million goodwill impairment charge in Q4 2003 relating to its Wireless Communications and Computing Group. That group is also set to merge with Intel Communications Group, the company said in December.

Other black spots for Intel have included the so-called Intel "Web Tablet," its failed Home RF initiative, a wireless networking protocol, as well as its entire Connected Products Division, which specialised in digital cameras, digital-audio players and toys. These technologies were launched during the technology boom amidst earlier hype surrounding the impending digital home. But some analysts argue that many components, including wireless networking gear, data storage devices, chips and video screens have become cheap enough to finally allow for the advent of the digital home.

Still, the likes of Intel and it partner Microsoft will face substantial opposition from companies like Philips, Panasonic (Matsushita) and most notably Sony, which launched its own all-in-one home entertainment hub called the PSX, allowing users to run and store video, audio digital images, as well as play Playstation games.

What's more, consumer electronics companies have long had control over the design of their CE devices, as well as the chips these products use. Ascendancy by Intel into the sector would shift the balance of power and could put one-time behemoths like Sony and Philips in the back seat.

© ENN