Intel Tries Anonymity, for a Change
An average laptop contains about 1,800 components, but only one garners much brand awareness from typical consumers: the chip made by Intel.
Over the years, Intel has used aggressive and catchy marketing programs to help elevate its position in the computing marketplace. This cachet has served Intel well, allowing it to command top dollar for its products, which power the vast majority of PCs. The Intel juggernaut was apparent on Tuesday as the company reported earnings better than expected on a sharp revenue increase.
But these days, Intel is moving into a new business — putting its chips inside products like TVs and other consumer electronics. In these areas, that familiar “Intel Inside” sticker found on so many PCs is often missing since it seems out of place on the sleek devices anchoring living rooms. And so Intel’s expansion plans include an unfamiliar level of anonymity.
“Our customers are really trying to deliver industrial designs that are beautiful and elegant,” said Jim Nucci, a brand manager at Intel. “We don’t want to be an obtrusive element.”
With encouraging strong sales of personal computers in the latest quarter and cautious optimism about the next quarter, Intel reported an 18 percent rise in revenue in the third quarter, to $11.1 billion, from a year earlier. Intel’s net income rose to $3 billion, or 52 cents a share, ahead of the 50 cents projected by analysts surveyed by Thomson Reuters. The company’s shares, which rose 1 percent during regular trading, rose another 1 percent to $19.97 in the after-hours market.
“We had record revenue,” Stacy J. Smith, the chief financial officer at Intel, said in an interview. “It was a very good quarter.”
More than two years ago, Intel unveiled a new type of low-power chip, Atom. Intel hoped the product would carry it into growing areas like smartphones, Web-ready TVs and set-top-boxes.
The company’s growth plans hinged on success in these types of devices, and the flashy release of the Atom brand reflected Intel’s lofty aspirations.
A host of rival chip makers like Broadcom and Freescale toil away in relative obscurity making the chips that go into household objects and consumer electronics devices. These companies tend to let device manufacturers enjoy the limelight and spend little on building their own consumer brand.
"Intel benefited from a unique time and place through the incredible rise of the PC. It was able to put its name out there and sort of drive the marketplace, and it took advantage of that."
Intel, by contrast, has established one of the most well-known brands on the planet. A recent survey from Interbrand, a brand consulting firm, ranked Intel as the seventh-best global brand, just behind companies like Coca-Cola and McDonald’s . Intel’s brand ranked higher than that of most of its customers, including Apple , Hewlett-Packard and Dell , and higher than Nike and Disney . And no other company that makes only computing components appears on Interbrand’s list of the top 100 brands.
“Intel benefited from a unique time and place through the incredible rise of the PC,” said Regis McKenna, a veteran Silicon Valley marketing and strategy expert. “It was able to put its name out there and sort of drive the marketplace, and it took advantage of that.”
But in recent weeks, a number of Intel-based products have arrived that make little mention of the company’s presence. Sony , for example, just started championing its Internet TV, a shimmering, flat-screen television with only a white Sony logo amid a sea of black. Sony’s Web site showcasing the new TV points first to the set’s ability to run software from Google and buries a mention of Intel’s chip at the bottom of the page.
Similarly, Cisco just released its Umi video conferencing system, which allows consumers to make high-quality calls through their TVs. An Intel-based set-top-box handles the tough work processing video data. When promoting the new system, Cisco executives did not talk about Intel’s helping hand.
Such behavior is unheard-of in the PC market, where Intel’s logo appears on the products and in the ads of companies like H.P. and Dell. Intel’s lavish co-marketing deals are well-known in the PC business and have sat at the heart of antitrust lawsuits against the company. Intel has been accused of using co-marketing deals and rebates to keep customers from switching to rival chips.
When it comes to TVs, Intel has started an extensive ad campaign that highlights its behind-the-scenes role in a number of products, including the gear from Sony, Google and Boxee. The Intel ads talk about the merits of “smart,” personalized television fueled by a Web connection.
“We think, in fact, that there will be a way to make a huge impact on consumers,” Mr. Nucci said. “We’ve given ourselves permission to start with a fresh set of eyes as we started moving into these new spaces instead of just borrowing from the past.”
Logitech has also made a device that runs Google’s TV software, and has opted to engrave Intel’s name and the Atom logo on the top of the product.
“Intel stands for quality and performance,” said Eric Kintz, a vice president at Logitech. “It is a little early to tell if it will resonate with consumers, but I think there’s some additional value.”
Mr. Kintz pointed out that the set-top boxes coming to market resemble full-fledged computers in the amount of work they handle and the software they run. Such traits play to Intel’s strengths in making fast chips and to its reputation with consumers and software developers, Mr. Kintz added.
The flurry of sales of the company’s chips in TV and set-top boxes seems to bode well for Intel’s consumer aspirations. The company sold one million chips aimed at smart TVs last quarter, and its only prominent loss was getting shut out of Apple TV.
If Intel can string together enough of these deals and establish its technological dominance in the market, it may well be able to extend its brand once again, according to marketing experts.
“Certain brands have the permission to do things, and Intel has the permission to have this discussion with consumers,” said Peter Sealey, a former chief marketing officer of Coca-Cola. “It’s only a matter of time until it’s off and running here.”
Prepare for the 3.0-gigahertz, Web-ready, Intel Inside toaster.