Jan. 6 (Bloomberg) -- Intel Corp., after struggling for years to succeed with efforts outside computers, wants to surf a ``wave of creativity'' into consumer electronics.

Chief Executive Officer Paul Otellini last night unveiled machines based on Intel's new Viiv chips to persuade people to replace satellite and cable receivers, digital video recorders and home entertainment machines with a new class of systems that have a computer's brain and an easy-to-use remote control.

``The capabilities we have built into Viiv are really fundamental to the way that consumers are going to use computers,'' Otellini said in an interview yesterday after his speech at the Consumer Electronics Show in Las Vegas.

Consumers account for a third of all personal computer purchases, a slice of the market that's increasing as laptops gain popularity, he said. Intel has so far found little success in breaking into the consumer market. It last year introduced the first mobile phone running one of its processors, five years after trying to enter that business.

Adoption of new computers that allow users to download movies, pictures and songs and to enjoy them on their televisions has been hampered by a lack of content and because older computer processors couldn't handle new digital content, Otellini said.

``It's the first foray into the living room,'' he said. ``It's only going to get bigger as the wave of creativity is unleashed behind this, and people start creating films and content specifically for this 10-foot user interaction.''

Shares of Santa Clara, California-based Intel rose 4 cents to $26.31 as of 4 p.m. in Nasdaq Stock Market composite trading. They gained 6.7 percent last year.

Internet's Promise

Actors and directors including Tom Hanks and Morgan Freeman and media executives such as America Online CEO Jonathan Miller joined Otellini on stage last night to tout new opportunities as more videos are delivered on the Web.

AOL's Miller helped Otellini demonstrate a new service available on Viiv machines that lets consumers have free access to the company's video and music content on their TVs using only a remote control.

``This has always been the promise of the Internet,'' Miller said. Users of the new AOL service will be able to watch its catalog of TV programs in high-definition online in exchange for watching short advertisements.

General Electric Co.'s NBC will provide exclusive footage of the Winter Olympics optimized for viewing on the new machines. Intel also signed deals for music, video and radio from the Internet services of Time Warner Inc.'s AOL in Dulles, Virginia; and El Segundo, California-based DirecTV Group Inc.'s programming will help attract buyers to the new machines, Otellini said.

Video Content

Intel will work with Mountain View, California-based Google Inc. on searching digital video content. The Google Video service will run on Viiv, so users can search and watch video on TVs or portable devices.

Microsoft Corp. Chairman Bill Gates a day earlier showed off the new consumer features in the next version of the company's Windows operating system. Windows Vista, available in the second half of this year, will include a new music download service called Urge, a new version of the Windows Media Player for videos and music and has advancements in handling digital photos.

Apple Computer Inc., which plans to start switching its computers to Intel processors this year, began selling downloadable television shows and music videos through its iTunes Music Store in October. Apple, based in Cupertino, California, also unveiled last year a version of its iPod music player that can show videos and TV programs.

Performance Threshold

``Getting content is all about creating the killer application like the spreadsheet and the word processor were for the original PC,'' said David Wu, an analyst at Global Crown Capital in San Francisco who rates Intel shares ``overweight'' and said he doesn't own them.

Intel also signed up Eros, the largest international distributor of Indian films, New York-based CBS Corp.'s MTV, Burbank, California-based Walt Disney Co.'s ESPN and Shanghai Media Group in China to provide programs for Viiv computer users.

Movie company ClickStar Inc. in Santa Monica, California, will release its film ``10 Items or Less''' over the Internet ``weeks'' after its release in movie theaters, a move that Otellini said will herald the beginning of a new way of distributing feature films.

Intel upgraded its processors to work better at performing two or more tasks at the same time, making it easier to access content carried over the Internet, satellite and cable signals. That will allow new functions such as playing a game and watching a movie on separate televisions powered by the same computer.

Intel plans to introduce more than 20 processors, chipsets and other products this month. The company described a ``billion- device'' market in August when it unveiled Viiv, Intel's first new brand since 2003. PC sales will total 202.7 million this year, according to Stamford, Connecticut-based Gartner Inc.

``What we did with Viiv was raise the threshold of performance,'' Otellini said in the interview.

To contact the reporter on this story: Ian King in Las Vegas at ianking@bloomberg.net; Fred Fishkin in Las Vegas at ffishkin@bloomberg.net.

Last Updated: January 6, 2006 16:14 EST