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Intel's Viiv low on holiday shopping lists

It's the most wonderful time of the year for the PC industry, but a major piece of Intel's home entertainment strategy remains out in the cold.

Almost a year after Intel announced plans to make your PC look like a TV, the company is still searching for the play button.

Intel's Viiv (rhymes with five) was supposed to make it easy to place a PC at the center of your digital living room. Last year at the Consumer Electronics Show, company executives promised that a content revolution was at hand, claiming consumers were ready to unleash themselves from pedestrian cable and satellite providers to embrace a new model that took advantage of the processing power of the PC and the increasing number of broadband Internet connections.

The basic idea was a clone of Intel's Centrino strategy: put a colorful sticker on a PC, get PC makers to put a combination of Intel-developed technology inside the PC and reward them with marketing assistance, then blast the airwaves with snappy messages promoting the product.

But Centrino took a technology concept that both businesses and consumers were starting to embrace--wireless networking--and made it easier for average PC buyers to understand. In Viiv's case, Intel and its partners are trying get people to use PCs in very different ways while wading into a new world of on-demand content delivery that is still challenging even for established cable and satellite companies.

Intel and its PC partners are moving a bunch of Viiv-equipped PCs, but it doesn't appear that consumers are making Viiv a priority as they shop for PCs this holiday season, or that they even know what it means, let alone how to pronounce it. Company insiders admit Viiv has fallen short of expectations even as Intel starts to get a little more momentum with content deals from household names like NBC and a growing number of certified devices.

Package deal
Viiv is all about making a PC the central device within a digital entertainment system. Viiv PCs are designed to store digital content, access exclusive content from the Internet, and stream that content to televisions within a home over a protected network. Intel's partners build Viiv PCs with a specified list of components that the chipmaker says are durable enough to stand up to the processing requirements of the digital entertainment experience, along with software designed to make this all a snap for the average PC user. Add to it a network of content deals with , and suddenly a Viiv PC looks an awful lot like a set-top box and on-demand television service from companies like Comcast or DirectTV.

Of course, Viiv PCs can do a lot more than a set-top box. A Viiv PC offers huge amounts of storage, the ability to organize photos and DVDs, DVR (digital video recorder) functionality, and a gateway to the Internet. But according to Current Analysis, only 13 percent of PCs with Microsoft's Windows Media Center Edition--a component of the Viiv platform--are sold at U.S. retail with even a single TV tuner, let alone dual tuners that allow people to record one show while watching another. This makes it much more difficult for consumers to use a Viiv PC as part of their home entertainment package and relegating it to a secondary role in the living room.

"These machines (without a TV tuner) are not the best digital entertainment devices to build a home entertainment system around," John Spooner, an analyst with Technology Business Research, wrote in an e-mail. "They're also quite expensive versus even the top-end traditional desktop with (Microsoft's Windows) Media Center."

There just hasn't been as much interest as the PC industry had thought, or hoped, in the idea of a living room PC. Some specialty PC makers have been experimenting with stylish designs bearing a Viiv sticker that resemble traditional consumer electronics equipment, but there hasn't been much appetite for those types of systems among mainstream PC buyers, and Dell and Hewlett-Packard don't even offer any of the so-called "entertainment PC" styles.

And plenty of PCs and software that don't come with a colorful Viiv sticker are capable of running the latest games, storing audio and video files, and playing movies. While those PCs may not have the rights to download content available only to Viiv PCs, such as hit NBC shows like Heroes, there's plenty of compelling video content available over the Internet such as the shows on Apple Computer's iTunes Store or Major League Baseball's package of games--not to mention YouTube's collection of videos.

Still, Advanced Micro Devices has tried to do the same thing with its technology: put a brand on technology that has been around for some time. While both companies have been able to point to an increased number of PCs that are shipping with the technology, it's easy enough to make that happen when the chipmakers require that all of their products for a certain class of PC feature the branded technology.

"Most consumers are not implementing entertainment properties inherent with Live or Viiv Media Center PCs, but investing in machines with stalwart configurations that--not coincidently--are offering some impressive value propositions in today's market," Toni DuBoise, an analyst with Current Analysis, wrote in an e-mail. "Viiv and Live's successes are associated more with the fact that it resides in the higher performing systems offered by the chipmakers today."

Fighting the system
Part of Intel's pitch for Viiv is that the company would certify those systems to be interoperable with a host of other devices, such as wireless routers and digital televisions. This includes being able to support DTCP-IP (Digital Transmission Content Protection over Internet Protocol) technology that locks digital content within a protected network of devices, so users can't exchange the latest episode of Lost with millions of their friends on the Internet. Plenty of devices have received certification, but most are from lower-tier vendors and public awareness of what the devices can do is pretty low, said Stephen Baker, an analyst with NPD Techworld.

Intel believes the real promise for Viiv is in the more compelling devices that are just starting to appear, said Claudine Mangano, a company spokeswoman. For example, Intel has signed a deal with DirectTV to certify a DirectTV set-top box for the Viiv program, and Acer recently agreed to distribute an LCD TV certified for Viiv, although just in Europe and Asia to start.

There are a few signs that people are more interested in putting PCs at the heart of their living rooms. Matt Dworkin of the Geek Squad noted that requests for help setting up Viiv PCs appear to be increasing, which at least shows some people are interested in the technology, although the fact that the Geek Squad was called suggests the technology is not as easy to use as originally promised.

"I don't want to say there was resistance, but people didn't quite see the purpose behind (Viiv) at first," Dworkin said. "But now with the increased popularity of TiVo and DVRs, people are looking to do more and more things. You don't have the versatility with TiVo that you do with (Viiv)," he said.

However, Intel is not the only company interested in putting its technology into the living room. Gaming consoles like the Xbox 360, PlayStation 3 and Wii are similar to media PCs with plenty of horsepower. Digital televisions are growing in sophistication, and Apple Computer is getting ready to wade into the living room with its iTV product, expected next year.

It seems that compelling content and easy-to-use products will one day convince the general public to geek out in the living room, but it also seems that Intel has a long way to go before the public sees Viiv as the fulfillment of that promise.

CNET's Erica Ogg contributed to this report.