Friday, January 11, 2013

Intel May Do What Apple Can't -- Lead The "Unbundling" Revolution

I have written literally for years now that Apple inevitably will launch an "all-in-one" flat-screen iTV to penetrate the living room -- the last bastion it has yet to dominate (I predicted 2012, but now it looks like this year).  The major stumbling block -- and likely the ONLY stumbling block at this point (since my bet is that the hardware design has long been developed) -- is the services piece.  And, even more specifically, the key television content (think ESPN here) necessary for Apple to revolutionize the over-the-top (non traditional cable) television experience.  To go boldly where others like Apple have tried to go before ... but have failed so far.

This is the "unbundling" dilemma facing Internet-based OTT service providers (Netflix, Google, Hulu, Amazon Prime, Vudu) in their continuing battles against the cable incumbents who refuse to allow content providers (like ESPN) license their content stripped out (i.e., unbundled) from traditional cable packages of multiple channels.  The OTT guys want to offer consumers a la carte "cable" programming.  The Cable/IPTV guys do not (for now).

So, who will win this battle royale?  Ultimately, consumers always win.  If they want something -- like individual channels (ESPN) -- they will get them, and business models will adapt.  Consumers likely will pay more for those precise channels they want.  And other channels simply will need to adapt their programming in order to survive.

What about the big cable guys?  What does this mean for them?   Well, they will increasingly become the purveyor of the pipes necessary to optimize the overall online television revolution (which ain't a bad thing, by the way, because those broadband services are much higher margin businesses than the content service provider businesses themselves).

Perhaps surprisingly, tech "dinosaur" Intel may be the one to crack the code -- to begin this unbundling revolution.  Why Intel?  Because Intel soon will launch its new virtual cable OTT television service.  And, Intel is taking a novel approach -- actually a similar approach to what Google is doing -- which is to roll out its new service on a city-by-city basis (rather than national) so that it may have more flexibility in negotiating key programming license agreements (including perhaps the holy grail of ESPN).  According to TechCrunch, this plan "also lets Intel work around holdouts in key market rather than having to delay a launch entirely."

But, wait, there's more.  At least one cable behemoth is not threatened by Intel's pursuit of the living room -- and is actually joining Intel on the couch!  That one brave soul, for now, is Comcast.  Future hardware with Intel chips apparently will be able to stream live Comcast Xfinity programming within the home and without the need for a traditional cable box (here are more details hot off the presses at CES).

One more cool thing.  It is reported that Intel's new virtual cable TV service also may try to make DVRs a thing of the past.  How?  According to TechCrunch, "Intel's technology could allow people to recall and watch any programming aired in the last month on the channels they subscribe to.  That means no worrying about scheduling what to record."