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Intel broadens investment strategy

In a bid to boost demand for its latest microprocessors, Intel unveils a new e-business strategy.

    In a bid to boost demand for its latest microprocessors, Intel (INTC) has unveiled an e-business strategy of funding, codeveloping, and marketing Internet applications in concert with other companies.

    Intel revealed its quiet efforts at the Fall Internet World 97 convention in New York yesterday, when it showcased new Internet advertising technology at a presentation with online ad agency Modem Media and four major advertisers.

    But the chip giant's initiative goes well beyond Net advertising. It includes investments of cash, engineers, and/or marketing support in online sales and marketing projects, as well as in infrastructure applications such as Web browsers, "push" technology, and 3-D rendering.

    "We are stepping up our investments in content that uses hardware, in particular for e-business, which is one of the most compelling areas for businesses to invest in," said Sally Fundakowski, director of an Intel business developer relations group.

    Intel has pursued Internet commerce publicly since August, when it unveiled its new e-commerce service firm called Pandesic, a joint venture with German software company SAP.

    "On a short-term basis, we hope we can encourage other businesses to adopt the Web as a major way of doing business," Fundakowski said. "In the longer term, we are getting involved in implementation of real systems to learn more about it. We want to take an active approach as opposed to sitting back."

    Intel would not disclose how much it is investing in its content-oriented investment initiative, which is designed to spur demand for its latest microprocessor, Pentium II.

    In Net-based sales and marketing Intel has worked with ticket distributor Ticketmaster and ModaCAD, whose software is used by fashion designers.

    Intel is developing with Ticketmaster, which already does business over the Web, an advanced ticket-system application that would let Internet users see the view from a particular seat at a venue before purchasing a ticket. Intel is fronting an undisclosed amount of cash to fund the project, and will receive a portion of revenues from it as repayment for its non-equity investment.

    For basic technologies, Intel has helped "push" vendor BackWeb and virtual reality technology firm Superscape develop their latest applications.

    On the browser front, it has cooperated with both Microsoft and Netscape to include videoconferencing and advanced multimedia in their browsers. Intel technology is built into Microsoft's Internet Explorer 4.0.

    The processor manufacturer also is working with Kurzweil on speech-recognition applications and with Macromedia on its multimedia authoring tools. It is working with several other developers to help them optimize their office suites for use with the Pentium II chip.

    In another advertising project, Intel helped finance a study from ASI Market Research on the impact of larger or more interactive Internet ads than those commonly seen on the Web today. Such ads boosted click-through rates 45 percent, and improved recall by 71 percent over standard ad banners, the study found, although the study also revealed that business users found more active adds proportionally more irritating.

    As NEWS.COM reported December 5, Intel yesterday showed multimedia and interactive ads for AT&T, Delta Airlines, Citibank, and Reebok that it had sponsored. The advertisers will pay to place the ads on Web sites.

    In addition, Intel is investing in Internet-oriented system integrators like USWeb (USWB). Intel invested $10 million in USWeb last month, just prior to its initial public offering.

    (Intel is an investor in CNET: The Computer Network.)