How do you know when a company’s management has lost touch with reality?When they pursue ideas like this.
Courtesy of the Wall Street Journal, we learned yesterday that Intel–yes, Intel–is pitching TV content producers with the aim of becoming a virtual cable company.
This plan isn’t unusual.
Lots of companies want to become virtual cable companies these days.
Apple, for instance, who wants to destroy the traditional TV business.
And Microsoft, which has been trying to disrupt TV for more than 15 years (remember WebTV?)
And all the cable companies, which are trying to save themselves by pursuing “TV Everywhere.”
And the satellite TV companies.
And Google, who just bought Motorola in part to help fix its disastrous Google TV product.
And every other Bob, Dick, and Harry who imagines that it will be a piece of cake to slap together a “virtual cable company” and cash in quick–after all, all you have to do is licence some content!.
And now, to this list, we get to add Intel.
Last time we checked, Intel was in the chip business.
Specifically, Intel designs, manufacturers, and sells semiconductor chips–little tech gizmos that go inside bigger tech gizmos that are then sold to companies.
Intel looks at the future of TV and thinks “Cool–another gizmo that can use one of our chips!”
And then, with a positively bizarre leap of logic, Intel decides that the best way for Intel to sell chips into TV boxes is for Intel to make the boxes and become a cable company.And why not?
After all, Intel knows so much about all the things you need to know about to create a virtual cable company:
- Negotiating content deals
- Creating awesome software user interfaces
- Creating programming bundles
- Selling services
- Selling services to consumers
- Competing against huge, entrenched media distribution monopolies as well as rich, well-funded, and hyper-focused competitors
Does Intel have a single executive who knows anything about any of these things?
We assume not. Because if Intel did, this absurd idea would have been shot down long ago.
If Intel plans to leap into businesses that it somehow considers “adjacent” to its chip-making business, then why not go into a few other businesses as well? Tablets, for one–people love tablets. Smartphones–the world certainly needs another competitor to the iPhone and Android and RIM.* Computers–people are still buying PCs. TVs–people buy a lot of TVs! None of those businesses have anything to do with making chips, of course, but that criteria doesn’t appear to be stopping Intel from thinking big.
Is there any conceivable advantage that Intel could have in the “virtual cable company” business other than having a huge pot of cash that it doesn’t know what to do with?
Nothing Intel knows how to do helps it in any way in going into this business. No one Intel knows helps it in any way in going into this business.
And the fact that management doesn’t instantly realise that suggests that they’ve lost touch with reality.
Mark our words: Intel’s cable business will be dead on arrival.
And if Intel is too pie-eyed to see that, any content companies and consumers who are considering signing up for the service should consider themselves warned.
* UPDATE: Editor Jay Yarow points out that Intel is, in fact, going into the smartphone business, where it will compete against Apple, Samsung, RIM, Google, and other companies that actually make smartphones. So that’s yet more evidence that Intel’s management has gone around the bend.