These boxes will be part of a wave of consumer electronics devices that will likely continue to blur the distinction between computers and entertainment devices.
However, most analysts discount the idea that intelligent TV set-top boxes or game units like the upcoming Sony PlayStation2 will displace the PC in the near term. Still, it is clear that devices will soon expand the methods for getting onto the Net, as well as the content that viewers get.
Technologically, the Intel-Nokia systems will be fairly similar to PCs. The boxes will contain Celeron or Pentium II processors, a version of the Linux operating system, and a browser from Mozilla.org, a group set up by Netscape Communications to shepherd the open-source development of the Communicator Web browser.
The Nokia-Intel systems, which will arrive in the second half of 2000, will allow viewers to recieve Web-"enhanced" digital TV broadcasts, or television shows with Internet content incorporated into the programming, said Ganesh Moorthy, general manager of the appliance group in Intel's home products division. This type of integrated programming is expected around the same time.
In addition, some models will likely contain additional applications, such as the ability to record programs onto a hard drive, similar to the digital VCRs currently being marketed by TiVo and Replay. Other models might contain a DVD player. Another potential application: a caller ID function that will flash the name of a telephone caller on the TV screen. That way, couch potatoes can decide whether it is worth getting the phone.
Although intelligent set-top boxes will be used to tap Internet content, the experience, Moorthy claimed, will be fundamentally different. Broadcasters are devising programming methods that will make "interactive" TV a more natural experience.
Further, content personally tailored to the viewer will also likely emerge.
"Instead of the 700 different stock ticker symbols, I might just see the 15 that I own," he said, describing how financial news might be streamed to the viewer. Personalized ads and news articles are also likely to be broadcast.
"By taking the lead and creating products that work with an existing Internet-based operating system such as Linux, we can give the television industry a strong platform that will let it deliver new exciting Internet-based services to their viewers," Heikki Koskinen, president of Nokia Multimedia Terminals, said in a prepared statement.
Though known primarily for its cell phones, Nokia manufacturers TV set-top boxes, which it calls multimedia terminals, for a number of European markets. To date, however, Nokia has primarily relied on non-Intel processors.
While customers will be able to purchase the units in a variety of ways, the boxes typically will be sold in conjunction with some sort of subscription service from a communications provider.
"The model is more like a cell-phone model," Moorthy said. The companies, he added, are preparing products for cable, satellite, and digital broadcast transmission providers, he added. Internet-enabled broadcasts will not be accessible through ordinary set-tops.
The Nokia deal is Intel's third major set-top box deal this year and fills out an important geographic center, Moorthy added. Earlier, the company struck a deal to provide Pentium MMX processors to Hughes Network Systems for set-top boxes for AOL TV. In August, Intel invested $50 million in a joint venture with Pacific Century Group to build a high-speed set-top box service with localized content for China.
All of these deals also involve set-top boxes that incorporate Pentium-class chips. The Nokia boxes, for instance, will utilize Celeron and more powerful processors, Moorthy said.
"It [the set-top market] is certainly embryonic at this point, but Intel wants to be there in case it turns into a significant volume opportunity," said Charles Boucher, an analyst at Bear Stearns.