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Intel Sells Media Division to Verizon

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Last week, Intel Corp. (INTC - Free Report) announced that it was selling off its Media division to Verizon Communications (VZ - Free Report) , a leading telecommunications company, for an undisclosed amount. Intel decided on selling the intellectual property and assets of Intel Media, the digital TV division of the chip maker, along with its set-top box project.

Intel sold the entire Division to the mobile carrier, removing the On Cue service from the holding pattern at Intel and adding it to Verizon’s network, which is better-positioned to make Internet TV work. For the Intel Media division, Verizon is like a pathway to millions of prospective customers.

Intel already has enough on its plate given the increasing competition in its core computing business and the challenges of entering the mobile market. Intel has also made a rather early entry into the “Internet of Things” segment, which is expected to grow into a huge market over the next few years. Therefore, this may be a good time to sell off the technology.

In Feb 2013, the chip maker announced its plan to launch an Intel-branded, online TV service, complete with an Intel-built set-top box. Intel wanted to provide a service for consumers that would compete with services from satellite TV providers, cable operators and phone companies.
However, while it managed to develop some smart technology, Intel struggled to obtain essential content deals. This caused the company to delay its product launch to 2014, which ultimately led to the decision to offload it.

Other established technology companies like Amazon, Netflix, Apple and Google also have their online video businesses, out of which Amazon and Netflix have been the most successful.

Intel will now concentrate on aligning its focus and resources around a broad computing product portfolio in segments which would range from the Internet of Things to data centers. However, Intel still faces challenges from competitors like Advanced Micro Devices, Inc. (AMD - Free Report) .

Currently, Intel Corp. has a Zacks Rank #3 (Hold). Investors interested in the technology sector can also consider Western Digital Corp. (WDC - Free Report) , which carries a Zacks Rank #1 (Strong Buy).

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