Is Television in Intel’s Future?

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The unit developing Intel’s (NASDAQ:INTC) pay-TV service is “run like a startup in stealth mode,” as GigaOm puts it, but the secrecy around Intel Media has not prevented rampant speculation that the service is the company’s solution to a post-silicon world.

Chief executive Paul Otellini is reported to have said that he wants to make services a big part of Intel’s future. “We need someone who doesn’t understand silicon,” he told Intel Media’s content head Erik Huggers during his job interview, according to GigaOm. “We need someone who has launched services, who has worked in a content environment, and who can help bridge that gap.”

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Intel has made a foray into the television business before, with its CE4100 chip powering the first-generation Google (NASDAQ:GOOG) TV. However, that device were largely ignored by customers. Now, Intel wants to design its own service, one that can compete with Apple (NASDAQ:AAPL) TV and offer consumers an alternative to big and expensive cable bundles. According to the publication’s sources, the semiconductor manufacturer has already spent $100 million on this bet.

Although the Intel Media division features former-Apple executive Courtnee Westendorf, who once managed global marketing for the iPhone and the iPod, the service will reportedly be nothing like Apple TV. Sources familiar with the product’s development told GigaOm that “Apple simply isn’t doing it right with its current-generation TV.” Huggers, who was formerly in charge of the BBC’s iPlayer service, dislikes Apple’s approach to its user interface, which pushes viewers to make active choices about what they watch through applications. He favors a broadcast-like approach instead.

But several problems may hinder Intel’s plan, including the fact that the company has little experience providing products directly to end users and reports that entertainment companies have been hesitant to license content for Internet television services.

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