Intel to Bolster Digital Home Networks

Computer chip giant Intel Corp. is expected to announce today a venture capital fund to invest in start-up companies developing hardware and software for digital home networks.

The $200-million Digital Home Fund would be the latest venture capital fund established by Santa Clara, Calif.-based Intel to promote technology in areas the company expects to grow. Intel Capital, the company’s venture capital arm, has formed similar funds to invest in communications and 64-bit technology.

Intel executives said the new effort was part of its strategy to develop technologies enabling people to move digital music, photos and video to any screen or speaker in the house. But today’s technology is too complex and confusing for many people.

“It’s a long journey to get consumers where we want them to be,” said Scott Darling, an Intel Capital vice president. “We’re doing this fund because we want the pace of innovation to pick up and the realizations for consumers to happen more quickly.”

With more homes equipped with high-speed Internet access, PCs becoming ever more powerful and digital material such as songs and video clips increasingly available, now is a good time to launch the fund, Darling said.

Intel already has invested about $50 million in digital content firms including chip designers BridgeCo and Entropic Communications Inc. as well as music downloading software company MusicMatch Inc.

“It’s an enormous market opportunity, equal possibly to all the households penetrated by cable and satellite today, and that’s 80 million households,” said Van Baker, research director in technology market researcher GartnerG2’s San Jose office.

Although some forecasters have predicted a multibillion-dollar industry in home networking, the actual numbers have been much lower -- in the hundreds of millions of dollars. Venture capitalists have been spooked from investing, said Kurt Scherf, vice president of Parks Associates, a market research and consulting firm based in Dallas that specializes in residential technologies.

“I think it’s a real boost to a lot of smaller companies in this space,” Scherf said.