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Monday, February 14, 2005
Intel gambles on 'Desktrino'

Intel is planning on an all-out assault on the lucrative consumer electronics market with a new processor technology that it claims will turn the PC into a multimedia hub

Intel is planning on an all-out assault on the lucrative consumer electronics market with a new processor technology that it claims will turn the PC into a multimedia hub.

Intel, the world's largest chip maker, is keeping details of the technology under wraps. It will introduce a set of chips with a new brand name in the third quarter. Advertising and technology experts say such a product will be tough to market.

Analysts say the chip bundle and software will transform the PC into an all-purpose multimedia device designed to function as a CD and DVD player, digital video recorder, game console, as well as a machine for traditional data processing and internet access.

Consumers, however, may not rush to give up their current desktop computers - cheap, straightforward, and in the corner - for these glossier devices.

"It's a market on the come, but it ain't here yet," said Jack Trout, a brand consultant who has worked with Intel and IBM. "Is anybody really sure that people want to do all this multi-tasking (on a PC)?"

The new brand will be just the tip of the spear as Intel goes after the estimated $US200 billion ($254 billion) market for consumer entertainment electronics and media.

Intel recently formed a digital home unit to develop chips for living room electronics and launched a "Digital Joy" campaign with Microsoft to demonstrate PC-based entertainment devices in US shopping centres.

The chip maker also recruited Eric Kim, an executive of South Korea 's Samsung Electronics, as its marketing director, and split with long-time ad agency Euro RSCG.

Agencies from the top three advertising groups - Omnicom WPP and Interpublic - are vying for the estimated $US300 million account, and sources familiar with the review said Intel wants ideas to promote the digital home.

Opposing Intel's bid will be traditional consumer electronics makers, such as Sony, whose new PlayStation 3 is rumoured to be much more than a game system, handling many of the tasks that Intel wants to put in the PC.

An Intel marketing director, Jeff Tripaldi, said recently the company would model the new brand on Centrino, its brand name for a collection of chips used in notebook PCs. In a nod to Centrino's success, company employees have temporarily dubbed the new brand "Desktrino".

"Desktrino" would likely include Intel's new dual-core, or two-in-one, microprocessor, which speeds up computing as PCs perform multiple, complex tasks. It may also include the capability of a wireless networking router, a feature it tried and failed to introduce last year.

Industry analysts say Intel faces a greater challenge with "Desktrino" than Centrino, which addressed existing problems with laptops by promoting good battery life and wireless connection capacity.

"It's not a guaranteed hit," analyst at technology consulting firm Envisioneering Group Richard Doherty said. "In a desktop, what am I getting that's different? Does it heat up the office less and does it take up less space on my desktop?"

The new brand, some say, should also distance home computing from the concept of an ungainly box collecting dust on a desk.

"Intel's trying to make the PC seem more relevant, and something that people will plan around the next time you're redesigning the house and next time you're buying PCs," semiconductor analyst with Needham & Co Charlie Glavin said.

Some doubt whether the idea of an entertainment hub will truly catch on among consumers who buy technology in piecemeal fashion and often based on popular trends.

"The dedicated machine that does one thing brilliantly tends to work out much better than the land of multifaceted machines," Mr Trout said. "That's why people tend to buy a Palm Pilot and an iPod."

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