Transforming Television: Innovation to bring the Internet to TV Alan Crouch
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1 Transforming Television: Innovation to bring the Internet to TV Alan Crouch Vice President of DHG Director of SW Engineering 2009 August 24
2 Digital Home Group Delight consumers by delivering the advancements for next-gen consumer electronics with rich, interactive Internet content and traditional broadcast programming
3 Intel s s Consumer Electronics Strategy Focus on Transition to Internet Connected (CE 3.0) CE 1.0 Analog TV CE 2.0 Digital TV CE 3.0 Internet Connected The Internet Changes the Game!
4 Consumer Usage and Trends People Want a Meaningful Combination of TV and Internet TV is the Single Most Used Technology Device in the Home ~1.5B color TVs in use (93.5% HHs) Average American spends 153 hours on TV and 29 hours on Internet each month (2009) What is Watching TV Relaxation Maintenance Interactivity Frustration Consumers Want New TV Usages Access internet content and services Smart recommendations Aggregated views of media Monitor & manage home energy and security Make video calls Blended Media Whole-Home 4
5 Why it s the Right Time Consumers Adopting Interactive Video Usage 207 Billion broadband videos will be viewed in APAC in 2009 (up from 3.6 billion in 2005) Source: ABI, Dec million broadband households in China in 2009 Source: Euromonitor % of global consumer traffic in 2013 will be some form of video Source: Cisco, million households in APAC with a home network in 2009 Source: IDC, 2009
6 Consumer Electronics Platforms Roadmap & Delivery Update Intel Media Processor CE3100 Multiple Segments Sodaville Optimized for Segments 45nm & Atom Core Future IA SoCs Optimized for Segments 45 & 32nm & Atom Core Blu-Ray Cable STB Connected A/V MDTV IPTV Connected A/V MDTV Blu-Ray All products and dates are based on current expectations and subject to change without notice.
7 Intel Media Processor CE 3100 Key Features & Benefits Intel Architecture Core Memory Controller I/O Intel Architecture Core Performance and headroom Compatible with SW that powers the Internet Intel Media Play Technology HW/SW decode of broadcast, Internet, Blu-ray* Seamless viewing experience Audio/Video Decoders Graphics & Display Processing Security Leading-edge edge CE Features HD video processing, composition, display Up to 7.1 channel output for home- theater audio quality & Blu-ray requirements Powerful 2D/3D graphics engine High performance for advanced UIs, EPGs,, gaming Product plans, dates, and specifications are subject to change at any time, without notice. * Other names and brands may be claimed as the property of others
8 Home TV applications on IA SOC HD Movie Downloads Video Karaoke 3D motion games Online education Online information: (News, Sports, Finance, Weather, Traffic ) Photo Sharing Community (QQ, MSN) Personal Media
9 The Intel Consumer Electronics Network Network Objectives Provide members with a competitive advantage through early access to Intel CE platforms, co- marketing, executive interaction, and business development opportunities. Offer CE manufacturers a broad ecosystem of 3 rd party solutions enabled for Intel CE platforms. The Intel Consumer Electronics Network is a community of hardware, software & services providers that accelerates the development and time-tomarket of Internet-connected CE devices. Members Include Enabling Fast TTM for Internet-Connected CE Solutions 9 * Other names and brands may be claimed as the property of others
10 DHG Value Proposition PLATFORM ARCHITECTURE Performance and AV Quality TIME TO MARKET Internet and Compatibility BRAND Intel and CE Combination of raw CPU performance, advanced graphics capabilities, and overall platform architecture enables better and more advanced usage models Availability of the IA developer ecosystem, proven tools, and established SW ecosystem allow products to enter the market quicker Impact of the Intel brand on purchase intent and perception of product capabilities is an advantage in selling consumer electronics devices
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12 Key Trends for CE Very clear that Internet is coming to televisions with all major CE OEMs showing some form of Internet services on TVs Strong momentum for Widgets and over-the-top applications Internet connectivity drives need for performance and headroom Intel s IA SoC is the ideal silicon for bringing Internet to TV
13 Driving Value Consumers Willing to Pay More for Widgets on TV! Research done after economic crisis began. When exposed to how the Widget Channel could be incorporated into the TV experience, 76% of consumers said they found this somewhat or extremely valuable. Surveyed how much more consumers would be willing to pay for the addition of Widget Channel to a new HDTV, Blu-ray player, and DSTB. When given specific incremental spending amounts between $25 and $85, there was between a 60% and 85% willingness to pay the premium with little variation in that willingness as the price went up. Full reports available at: Source: Primary Research The Diffusion Group, Q * Other names and brands may be claimed as the property of others
14 Legal Notices This document contains information on products in the design phase of development. Intel processor numbers are not a measure of performance. Processor numbers differentiate features within each processor family, not across different processor families. See for details. Intel, CE 2110, CE3100, Core 2 Duo, and the Intel logo are registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries. Sodaville is a code name. Copyright Intel Corporation All rights reserved.
15 Risk Factors This presentation contains forward-looking statements that involve a number of risks and uncertainties. These statements do not reflect the potential impact of any mergers, acquisitions, divestitures, investments or other similar transactions that may be completed in the future, with the exception of the Numonyx transaction. Our forward-looking statements for 2008 reflect the expectation that the Numonyx transaction will close during the first quarter. The information presented is accurate only as of today s date and will not be updated. In addition to any factors discussed in the presentation, the important factors that could cause actual results to differ materially include the following: Factors that could cause demand to be different from Intel's expectations include changes in business and economic conditions, including conditions in the credit market that could affect consumer confidence; customer acceptance of Intel s and competitors products; changes in customer order patterns, including order cancellations; and changes in the level of inventory at customers. Intel s results could be affected by the timing of closing of acquisitions and divestitures. Intel operates in intensely competitive industries that are characterized by a high percentage of costs that are fixed or difficult to reduce in the short term and product demand that is highly variable and difficult to forecast. Additionally, Intel is in the process of transitioning to its next generation of products on 45 nm process technology, and there could be execution issues associated with these changes, including product defects and errata along with lower than anticipated manufacturing yields. Revenue and the gross margin percentage are affected by the timing of new Intel product introductions and the demand for and market acceptance of Intel's products; actions taken by Intel's competitors, including product offerings and introductions, marketing programs and pricing pressures and Intel s response to such actions; Intel s ability to respond quickly to technological developments and to incorporate new features into its products; and the availability of sufficient components from suppliers to meet demand. The gross margin percentage could vary significantly from expectations based on changes in revenue levels; product mix and pricing; capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; excess or obsolete inventory; manufacturing yields; changes in unit costs; impairments of long-lived assets, including manufacturing, assembly/test and intangible assets; and the timing and execution of the manufacturing ramp and associated costs, including start-up costs. Expenses, particularly certain marketing and compensation expenses, vary depending on the level of demand for Intel's products, the level of revenue and profits, and impairments of long-lived assets. Intel is in the midst of a structure and efficiency program that is resulting in several actions that could have an impact on expected expense levels and gross margin. We expect to complete the divestiture of our NOR flash memory assets to Numonyx. A delay or failure of the transaction to close, or a change in the financial performance of the contributed businesses could have a negative impact on our financial statements. Intel s equity proportion of the new company s results will be reflected on its financial statements below operating income and with a one quarter lag. The tax rate expectation is based on current tax law and current expected income. The tax rate may be affected by the jurisdictions in which profits are determined to be earned and taxed; changes in the estimates of credits, benefits and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets. Gains or losses from equity securities and interest and other could vary from expectations depending on fixed income and equity market volatility; gains or losses realized on the sale or exchange of securities; gains or losses from equity method investments; impairment charges related to marketable, non-marketable and other investments; interest rates; cash balances; and changes in fair value of derivative instruments. Intel s results could be affected by the amount, type, and valuation of share-based awards granted as well as the amount of awards cancelled due to employee turnover and the timing of award exercises by employees. Intel's results could be impacted by adverse economic, social, political and physical/infrastructure conditions in the countries in which Intel, its customers or its suppliers operate, including security concerns, natural disasters, infrastructure disruptions, health concerns and fluctuations in currency exchange rates. Intel's results could be affected by adverse effects associated with product defects and errata (deviations from published specifications), and by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust and other issues, such as the litigation and regulatory matters described in Intel's SEC reports. A detailed discussion of these and other risk factors that could affect Intel s results is included in Intel s SEC filings, including the report on Form 10-K for the fiscal year ended December 29, 2007.
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