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Intel to close consumer electronics division

Updated:
SAN JOSE, Calif. (AP) _ Chip-making giant Intel Corp. is getting out of the gadget business.

The company said Friday it will shut down its Connected Products Division early next year and no longer produce digital cameras, music players and toys.

Intel began selling electronic gadgets in 1997 to generate revenue beyond its core processor business. Because they connected to PCs, it was also seen as a way to boost demand for its primary chip products.

But in the current economic climate, the potential for sales and profits was not high enough, said company spokesman Bill Calder.

``While we had some success in some of these product categories, the business did not meet Intel's requirements for long-term growth,'' he said.

The world's largest chip maker will continue to supply flash memory, processors and the other electronic innards for other manufacturers' devices.

Products to be phased out include the Intel Play Computer Sound Morpher, Digital Movie Creator, the QX3 Computer Microscope, all PC cameras, the Intel Personal Audio Player 3000 and the Pocket Concert Audio Player. Wireless keyboard and mouse products also will be discontinued.

Existing inventory will be sold off, and Intel will continue to support the products after manufacturing has ceased, Calder said.

Earlier this month, the company introduced three new consumer products, and its Web site continued to feature the announcement Friday.

Some analysts were critical of the decision to enter the market, saying the chip maker was losing focus.

``It didn't seem like it was really core to what Intel does, which is primarily sell things that go inside other people's products,'' said Steve Kleynhans, an analyst at Meta Group.

The company also said Friday it is shelving plans to introduce a Web tablet, a lightweight wireless gadget from which users could surf the Internet. The device was still in development and had not reached stores.

Networking products, including its AnyPoint home networking line, are run by a separate division and will not be discontinued.

Employees who worked in the Connected Products Division will be placed in a redeployment program. If new jobs are not available within a certain time frame, they will be offered severance packages.

Shares of Intel closed up 10 cents at $24.15 on the Nasdaq Stock Market.
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