Q&A with Mike Witteman, Director of Service Technology at Intel

Intel (http://www.intel.com) last week got into the streaming media market in a big way when it announced its new streaming business unit. It said it was building its own delivery network, effectively putting itself in competition with companies like Akamai and Digital Island. It even garnered wide support from industry bigwigs like Loudeye, DoubleClick as well as providers like iXL Live, McLeodUSA, MediaOnDemand.com, theDial and POPcast Communications.

The announcement came as a surprise to many, but perhaps Intel's biggest surprise was the established--and accomplished--customers it was doing work for since February 2000. Among them are Quokka Sports, Fox, Premiere Radio Networks, nasdaq.com, MeTV.com and KISSFMi.com to name a few.

Intel said it was investing $200 million to build its new facility in Oregon and would be opening another in London. I spoke with Intel last week to get a handle on just what this new business will be doing and how they slipped under the radar.

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Q: Tell me about the new business unit.

A: What we're announcing is that Intel has a group called Internet Media Services that's now providing high quality streaming services with things like feature films, movie trailers, sporting events, live concerts, corporate briefings and the like. What we've done is we've built—and are building—a distributed global network that's optimized for streaming media.

You may ask about the idea of Intel in Internet services--

Q: Ok, sure, tell me.

A: --And we really have a lot of expertise in the streaming media area. First of all, we've been working in media for over a decade. In the late 80s we started working on things to enable the PC to handle multimedia. We created Indeo video which helped people to do CD-ROMs, also the Intel VideoPhone for videoconferencing, the Intel streaming web codec which is used in the Real G2 player. We've really had a heritage in working on media, especially in an IP world. And then the other thing Intel has done a lot is having run fabrication facilities on a 24/7 basis around the world, it gives you both the process and understanding to keep things up and running in all hours, all regions for all customers.

Q: So why now, why not earlier when you started getting into multimedia.

A: First when we did Indeo, there wasn't even a streaming media market. We've seen this market opportunity come up in the last few years and Intel got into the online services area where we hosted dot comes and corporate web sites and our customers started asking us "We'd like to get a streaming media distribution service out of you as well". And we started looking into the area, looked at the market and saw it was growing twenty-fold over the next five years, to what's expected to be a 2.5 billion market. That's from an IRG report and other people have collaborated those numbers. But we're not going to get into a market unless we're going to add value. Where we can do that is around creating the infrastructure and network intelligence technology that can offer a high quality streaming media for our customers.

Q: When you say you're creating a network are you doing it from scratch, or using partners to just offer it under your umbrella of services?

A: With networks, it really is a web of networks. There are a couple of parts to it. First, we're building a 70,000 sq. ft. broadcast operation center here in Portland, Oregon. And that's where we bridge the broadcasting world with the Internet. You can think of it as an Internet head end, very robust and reliable for broadcasters. From there, we go out to our distributed network of servers around the world that are closer to the edge. So we have the edge distribution concept. Really, the measure of quality isn't the number of servers or location, it's how good you can manage that network. We've developed technology that goes out and serve that stream from the optimal server in our network—a private network that bypasses the Internet and bottlenecks since we have private network connections between our broadcaster center and edge server locations.

Q: So you're not partnering with the Digital Islands or Akamais. You're doing this on your own?

A: We're doing it on our own and we're partnering with companies like InterNap and Teleglobe to provide us with excellent private carrier facilities and ATM network capabilities so we can distribute this media all around the world.

Q: So actually you're in competition with Digital Island and Akamai?

A: Yeah we see there are a couple type of competitors. One is the content delivery networks that started out as data caching networks and are trying to retrofit themselves as streaming media networks. And then there's another category of companies that have built streaming networks. How we're differentiating ourselves is that we built this network from the ground up, to be extremely reliable. We saw that was the number one complaint for content providers—they couldn't get reliable streaming. So we created full reliability in the whole chain. When we bring in content, we have two encoding chains so if one goes down, we switch over to the other. We built our broadcast operation center to be 100% digital unlike the competition—because you don't want signal degradation or noises. Then we have complete fail over, no single point of failure in our POPs. If we have problem with one we move it over to another.

Q: You're partnering with lots of streaming media companies. Are you offering services like encoding, production and hosting using these partners, then? You're offloading it to your partners?

A: Exactly. We have complete broadcast-quality encoding and content management facility. So we do all that work, we also have the capability with partners like Loudeye, if we have a large-scale amount of clips or special processing we can work with them as well. To your point, we created this underlying infrastructure, much like other Intel businesses have done. Intel is successful where we create a horizontal business like processors or flash memory and then allow people to build on top of that.

The content providers we've talked with, it's very important for them to move from where people are streaming to where there are actually business models and making money with streaming. One of the ways we've focused on that is through advertising and we've partnered with DoubleClick to put banner ads and video ads and have them targeted. CPM rates for streaming media sites are typically two to two and a half higher than regular, static web content sites.

Q: I'm curious about the your partnerships. I mean, you've announced support for both Real and Microsoft but how deep does that relationship go?

A: We have a very deep relationship with both Microsoft and RealNetworks. As I said earlier, we've had the video codec and a lot of joint development like the RealPresenter G2. And we've have an historically strong relationship with Microsoft as well. We've been closely working with Microsoft people to get the most out of the Windows Media technology.

Q: So you don't work with Apple. Have you talked to them?

A: We've been working with Apple, but we don't support the QuickTime format yet and are planning to do that later in the year. So that's really ramping up now.

Q: So what do you say to people that say Intel's just in this to keep their chip business up and running and populating these high-end servers and PCs?

A: I would say there's a secondary benefit, as more people use multimedia on the PC, people buy higher-end PC platforms. That is a benefit of the whole streaming media area. However, that is not the focus. That's to create new revenues and new businesses around serving the Internet.

If you look from the high level, Intel has a broader mission than being a chip maker. Intel's mission is to be the pre-eminent building block supplier for the Internet economy. And that has four different sections in Intel. One, we make excellent client processors for PCs and PDAs. Another is networking equipment and our server group focuses on creating solutions for folks that need server horsepower for the Internet. The new area we're in is the Internet solutions and services and the goal is to grow new business and new revenue for Intel around Internet infrastructure services. And the first one Intel came out with was the Intel Online Service which has been running since last year.

Q: So what about the customers you've announced?

Well, the measure of all this is "What kind of customers can you bring on board." We've got a whole list, I'm not going into all of them. Some of the highlights here, is we've been working with Fox Entertainment streaming movie trailers, worked with Premiere Radio Networks, which has the top radio on the web. We stream Rush Limbaugh, Dr. Dean, Dr. Laura, etc. these are some of the highly trafficked sites out there.

Q: Well they used to be with broadcast.com for a long time.

A: They've been on our network since February this year. Another example is Quokka Sports. They're a great example in that they are hosted with our Intel Online Services group, streaming is done through our service and we've even done professional services for them to help them get their interactive web site up and running.

Q: So tell me, how did you guys get under the radar and spring this on everyone?

A: It wasn't always that easy. We started our service in February this year with a limited customer base and we did that under non-disclosure agreements, both ways. And we really wanted to wring out the services, understand our requirements and make sure that everything was operationally sound before we opened our doors to the broader audience. Now we're definitely outgrowing our current capacity and have spec'ed out this new center in July (the one we talked about earlier). Then in the fourth quarter in this year, we're building a broadcast operation center in London to service the European market.