NEW YORK -- Intel Corp. is investing $200 million in a new business to help Web sites meet demand for audio and video programming from a growing number of Internet users with speedy cable and DSL connections.
The world's largest manufacturer of computer chips announced its foray into "streaming media" today, a bid to extend the company's influence to an emerging market with few established players.
The plans include two broadcasting centers connected to a dedicated communications network, bypassing many of the Internet traffic jams that can interrupt the flow of heavy-duty Web content such as movies, radio, live concerts or video conferencing.
Intel also plans to work closely with telephone and cable TV companies to provide a smooth handoff when Web content crosses from its network to the local link reaching a home or business.
The two broadcast centers, already under construction, will be equipped with production and editing equipment for customers. The first is scheduled to open in July in Portland, Ore., and the second in London later this year.
The new Intel venture comes amid a mad dash by cable and phone companies to upgrade their systems for high-speed Web services.
While a third of the nation's homes now have Internet access, most still use a dial-up telephone connection. But while only about 3 million homes currently use high-speed connections, that number is expected to multiply rapidly in the next few years.
"The increased availability of broadband connections to the Internet is starting to create significant markets for using those connections for streaming media," said Peter Christy, an industry analyst for Jupiter Communications.
In addition to capturing a share of a hot market, Intel's streaming media business may also drive demand for its main product: high-speed chips needed to power computers that receive and play the Web content.
"Intel realized the Internet was a constraint on people using high-powered chips. When you get a DSL connection or a cable modem connection, there's a lot of interesting things you can do that require a more potent chip," said Christy. "If by investing in this they can invigorate the market for high-end personal computers, it's certainly in Intel's best interests to do that."
The new business has been operating on a trial basis since February at an existing Portland facility with customers such as Nasdaq.com and Golf Magazine.
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