February 2, 2001 12:05 PM PST

Intel's e-commerce experiment fizzles

Apparently, not even Keiko the lovable killer whale was strong enough to keep Intel afloat in the e-commerce hosting seas.

The Santa Clara, Calif.-based chipmaker has closed its iCat e-commerce hosting service for small and medium-sized businesses, company representatives confirmed.

Intel sold the service directly to customers and indirectly through ASPs (application service providers). Intel shut down the sites it hosted through its On Line Services division Thursday, a representative said.

Intel warned customers and ASPs a few months ago that the company was phasing out the service, had stopped accepting new customers, and was helping iCat customers shift to different service providers.

Customers that used the iCat service at various times included a business that sold items related to Keiko, the killer whale from "Free Willy." Intel acquired iCat in December 1998 and initially sold it as a software application and a service, but then dropped selling the software by May 1999.

The demise of iCat is the latest casualty in Intel's efforts to diversify into new businesses. In the late 1990s, the company launched a major initiative to expand its portfolio of products and services. Since then, the company has spent more than $7 billion and acquired well over 20 companies in the process.

Some of these experiments have worked. Intel's wireless home-networking products are selling quite well, according to analysts.

Other ventures, however, have not. In 1997, Intel acquired graphics chipmaker Chips and Technologies for approximately $430 million. Graphics chip executives and analysts expected that the company's manufacturing expertise and close relationships with PC makers would instantly thrust the company to the front of the market.

PC makers and customers, however, did not warm to the i740 graphics chips, which received mediocre reviews. Intel unceremoniously exited the graphics chip business in August 1999.

Ironically, around the same time of the Chips and Technologies experiment, Intel began to incorporate graphics technologies it obtained under a different deal into its chipsets. These proved popular, and Intel is now one of the largest graphics companies in the market.

Pandesic, a touted e-commerce venture with SAP, met its end in July 2000. Despite clients such as Adidas and Fila, Pandesic suffered from an inability to create vertical service packages that the market demanded at the time the market wanted them.

"They were leading-edge in 1997, but the market has changed significantly since that time," Dave Boulanger, an analyst at Boston-based AMR Research, said at the time. "Pandesic is or was a great solution. Long before the term ASP was popular, they were there in the market."

Recently, the company also changed how it sells its NetStructure server appliances. Intel began to sell the servers, released in 2000, under its own brand name. PC makers, who make competing products, complained. Now Intel makes the servers but sells them to PC makers like Hewlett-Packard and Compaq Computer, which then sell NetStructure under their own brand names.

 

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