Intel to phase out consumer electronics business

SANTA CLARA, California: The world's largest chipmaker, Intel Corporation, is discontinuing its consumer electronics business, which it started in 1998, due to a lack of profitability and a desire to focus on its core business.

While some of the Intel-branded products, such as its PC-connected camera and digital audio player, were successful and well-reviewed, Intel pulled the plug on consumer electronics, adding it to other peripheral businesses that it has abandoned recently as unrelated to its core microprocessor business.

"We had some success in some of these product categories," an Intel spokesman said on Friday. "However, looking at the long term, it doesn't meet our requirements for long-term growth."

He declined to comment on the unit's annual sales. The unit, however, is lumped into the "all other" category on Intel's income statement, which amounted to $63 million in third-quarter sales and an operating loss of $662 million.

Santa Clara, California-based Intel will continue to sell the products until the existing inventory is finished, probably early next year. It will not manufacture any more of the products, which also include a digital microscope, the Pocket Concern Audio Player and the Intel Pocket PC Camera.

Also scrapped is a Web tablet that can access the Internet, a prototype of which was shown at the Consumer Electronics Show in January, and the Dot.Station, an Internet appliance.

Intel will continue, however, to manufacture and sell its AnyPoint Wireless home network devices, produced by another division, the spokesman said. Intel will also continue to sell its StrongARM processor to vendors who want to make such devices, he said. "That's not to say other companies won't be successful there," the spokesman said. "We'll still provide the building blocks, we just won't build them (the devices) ourselves."

Initially, Intel founded the unit, called the connected products division, to help boost the overall personal computer market, and to bring new users to PCs who would use them in ever-broadening ways.

Intel employees who work for the connected products group will be given the opportunity to apply for other jobs within Intel, or can accept a severance package, the company said.

(C) Reuters Limited 2001.