What's a Viiv, and will you care come Christmas? Intel (INTC) sure hopes so. So do its PC vendor partners, including Hewlett-Packard (HPQ), Toshiba (TOSBY), Gateway (GTW), and others.
Viiv (it rhymes with five) is Intel's response to demand for personal computers that can record and distribute digitized TV shows, music, and movies around the house—be it on a PC, TV, stereo system, or portable media player.
Seeking a marketing wedge amid a download-crazy consumer populace, Intel rolled out the Viiv label after an overhaul of its branding strategy late last year (see BusinessWeek.com, 1/09/06, "Inside Intel") following the ascendancy of Chief Executive Paul Otellini.
It remains to be seen how strongly the Viiv brand is resonating with consumers, but it's apparently not a big hit with the world's biggest PC vendor, Dell (DELL). The company, a newly minted customer of Intel rival Advanced Micro Devices (AMD), announced new machines in recent days sporting AMD's competing media PC platform, AMD Live, though it also continues to sell some Viiv systems.
COMPLEMENTARY PRODUCTS. Luckily for Intel, Viiv has made inroads with HP, the company that sells more Media Center PCs than anyone else. Its retail lineup includes two Viiv machines, two AMD Live machines, and one that uses neither.
Viiv also stands to benefit from rising demand for PCs loaded with Microsoft's (MSFT) Media Center software, which are finally gaining traction after launching in fits and starts in 2002. Researcher IDC expects nearly 6 million Media Center PCs to sell by the end of the year, nearly twice as many as in 2004. IDC doesn't say how many of those will include Viiv. And that segment of the business is growing faster than the overall consumer PC market. IDC analyst David Dauod says 6.6% of all PCs sold to consumers this year will be Media Center PCs.
Meanwhile, other products meant to complement the Viiv are starting to spring up. Networking equipment maker Netgear (NTGR), for instance, launched a set-top box it calls a "Digital Entertainer" that is designed to take music, movies, and pictures stored on the PC and play them on the home stereo system or TV set directly over the home wireless or wired network. Displayed prominently on its retail packaging: an Intel Viiv logo. Linksys (a unit of Cisco Systems (CSCO)), D-Link, and Acer are expected to follow with competing products soon.
DOWNLOAD TOEHOLD. Additionally, other products aimed at the living room are evolving. HP last year launched a flat-screen TV set with home networking connections—Ethernet and Wi-Fi—built in. Huge network-connected hard drives, also called home media servers, meant to hold large libraries of digital music files, TV shows, and movies, are starting to appear from companies like Seagate (STX) and HP.
Even as demand for Media Center PCs gathers steam and a host of products aimed at the digital lifestyle hit the market, Viiv's success will ultimately hinge on how deeply consumers feel the need for media-enabled PCs. Sure, legions are using their PCs to download songs from Apple's (AAPL) iTunes music store and other destinations on the Web. They're also watching clips on News Corp.'s (NWS) MySpace, video site YouTube, recently acquired by Google (GOOG), and sites run by networks like CBS (CBS) and Disney's (DIS) ABC.
But few consumers are downloading movies or complete TV show episodes, according to Ipsos-Insight. A recent study by the Minneapolis consumer research firm found that only 3% of Americans have ever downloaded a full-length movie, and only 5% have ever downloaded a TV show.
Moreover, Intel needs to do a better job communicating what Viiv is, analysts say. Intel, having retired the recognizable Pentium name, is fighting to build a new brand. And it may be getting lost amid the chatter, says analyst Tim Bajarin, head of Creative Strategies, a Silicon Valley consultancy. "What Viiv really is about is managing the digital lifestyle. The problem it's having is telling people what it is," he says. "And what Intel is saying is getting intermixed with all the marketing that Microsoft is doing around the Windows Media Center anyway."
So what's a Viiv? Intel will be glad to tell you. As soon as it figures out how.
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