I was excited about the announcement last week that Intel was developing an internet TV service. I'm not really sure whether anything will come of it, but Intel does seem to have some smart engineers that come up with cool stuff.
In fact, I often wonder if there might be a little animosity between the employees on the fabrication side of Intel and those working on the design side. By the time the fab guys get a plant ready to make its product, the design guys have already made it obsolete. It has got to feel a little like sweeping a dirt floor or rolling a rock up a very steep hill.
But, I digress as I really wanted to talk about television.
Sick of Streaming
A few days ago I was complaining to my wife that I was sick and tired of streaming video. Our two children were independently watching a TV show on Netflix while she and I tried to watch a third program at the same time, which suited our tastes. Well, our not-so-speedy DSL internet connection promptly choked on the prospect of streaming three different shows at the same time and the kids were soon complaining about something happening to their internet connections. You see, our biggest problem with streaming video is that we are addicted to it. That night, we decided to read our e-books and the kids were able to watch Netflix for a couple hours without interruption.
We’ve got experience with lots of choices over the last decade. You name it; we’ve tried it – DIRECTV, Dish Network, Comcast Cable, Netflix, and Hulu. We even tacked on TiVo and Microsoft’s UltimateTV DVRs back in the days when they were offered with our satellite TV service. Our favorite experience was with TiVo because its little robotic AI would wade through the nearly unlimited entertainment options and record stuff that it learned we might like. So, we could choose to spend hours looking through the draconian channel guides ourselves, or take the simple route and see what TiVo had already set up and recorded for us.
If Intel gets into the Internet TV business, I hope they can provide a good interface that will provide recommendations based upon the real viewing habits of the user. The Netflix rating system on movies was invaluable when we were DVD subscribers. We wouldn’t waste our time, or postage, on a movie that “people like us” didn’t like. Netflix also provides recommendations for streaming, based upon what we’ve watched in the past. TiVo’s thumbs up or down system, and the automatic recording of shows would be hard to beat though. In any event, Intel needs a robust system to help us weed through the morass of media that is available. Seriously, our eyeballs can only view an extremely small fraction of the material that is available and we could use some expert advice on what to glue them to.
I also hope that Intel will steer clear of a strictly streaming format because of bandwidth limitations. Intel has pioneered DRM technology in hardware, so Intel should be able to transmit media files to the user’s storage media or a proprietary DVR during off-peak hours which can be played lag-free at a later time when the user decides to sit down and watch it.
The Name Game
Hopefully, Intel can come up with a catchy name for the new business. I like “Intelevision”, but they would probably have to fork over some bucks to Mattel for the use of the name that they used for a game console in the late ‘70s. Netflix has a cool name, which may have been a major reason why Reed Hastings attempted to separate their DVD rental business from the streaming one. Supposedly, the name Hulu is derived from a Mandarin word that means either “gourd” or “interactive recording”. Now, I don’t know Mandarin, but I just think it’s a goofy name. Peter Lynch (whom, I mentioned last week) might have liked the Hulu name because he said some of his best investments had stupid names and tended to receive less analyst coverage than those with catchy sounding names (like Netflix).
Intel is currently my third largest holding and is approaching 5% of my portfolio after adding to my position a week ago upon the assignment of some put options. Now, this company has not treated investors very well over the last ten years and I really don’t know how this TV thing will work out. But, I am quite optimistic that Intel will be making huge inroads into the mobile arena in the next couple years. Personally, I have held off on making a tablet purchase because I want something that is compatible with the x86 programs that I have written and continue to write for the tracking and analysis of stock investments. I think there could be a huge pent-up demand from enterprise type folks that are waiting on the same thing. Software development for proprietary use is expensive and it would probably cost billions to convert existing code for use on Android or iOS devices.
As of today's close, Intel is flagging twelve positives on my home-brewed contrarian value investment analysis which is based upon thirteen different fundamental and technical indicators.