Netflix's Next Competitor: Intel?

I didn't see this one coming: The Wall Street Journal is reporting that Microchip King Kong Intel (NAS: INTC) is looking to get into Internet TV any day now.

A few years back, the chipmaker partnered with Yahoo! to bring Web content to TVs, but this initiative would be looking at instead bringing TV content to the Web. The report claims that Intel has been pitching the idea to media content partners for months in order to become a "virtual cable operator," and would inevitably butt heads with traditional cable players like Comcast and Time Warner Cable (NYS: TWC) , not to mention satellite-TV offerings like DISH Network (NAS: DISH) and online streamers like Netflix (NAS: NFLX) and Hulu.

Intel is coming up with its own set-top box, STB, to serve up the offering, which might carry Intel's branding. This is even more interesting, since Intel effectively bailed on smart TVs and STBs back in October, when it shut down its Digital Home Group, handing the space over to ARM Holdings and MIPS Technologies, although it still supplies some STB chips.

The company is supposedly looking to launch by the end of this year, and has asked content partners to name their prices for various channel and program subscription packages. CEO Paul Otellini has long made his ambitions beyond computers clear, but I think the company is facing a steep uphill battle here.

The incumbents are already aware of the slow shift to online streaming, and Sony and DISH have been discussing putting together a similar offering. Apple (NAS: AAPL) has also been having talks with media execs, with CBS CEO Les Moonves previously turning down Steve Jobs personally.

Beyond competition, there are bandwidth considerations, since users would still need to get their own Internet service from the same cable operators that Intel is looking to compete with. There are plenty of details that would need to be hammered out, and I have my doubts about Intel's ability to deliver a viable Internet TV service.

Netflix isn't worried either, with CEO Reed Hastings brushing off concerns, as numerous companies have tried to put something together ... and all have come up short.

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At the time thisarticle was published Fool contributorEvan Niuowns shares of Apple and ARM Holdings, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Apple, Intel, and Yahoo.Motley Fool newsletter serviceshave recommended buying shares of Yahoo, Intel, Netflix, and Apple; and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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