Intel Corp plans to phase out its consumer-electronics group, which makes digital cameras, toys and audio players, as the biggest computer-chip maker sharpens its focus and trims slower-growing products.
The Connected Products Division will stop building electronics devices and sell the leftover inventory until it runs out in the first quarter, spokesman Bill Calder said.
Intel started adding such consumer gear in 1997 as it tried to win more sales outside its main chip business. The company had hoped to spice up personal computers with fresh tools and new ways to get on the Internet from anywhere in the house, betting that new uses for PCs would boost demand for the microprocessors that provide more than 80 percent of its revenue.
"Their diversification strategy has been very broad," said Brooks Gray, an analyst at market researcher Technology Business Research Inc. "They need to cut back in some of the less- profitable, less-promising products."
As economic growths slows worldwide, Intel needs to spend more time refining its processors and winning new customers for the services unit that manages Web sites for companies, Gray said.
The chipmaker is cutting 5,000 jobs, postponing office-construction projects and reducing spending on travel and discretionary items as demand wanes. Intel, which broadened its lineup as demand soared, is narrowing its emphasis back to semiconductors.
The Santa Clara, California-based company in June said it would stop creating new versions of some networking devices like switching and routing systems. In February, the company shut down iCat, which helped small and mid-sized businesses create Internet- based stores and ran their electronic-commerce transactions.
As part of the new plan, Intel won't ever sell the Web tablet it demonstrated at a trade show in January and will back off selling its Dot.Station Internet-access device.
"We had some success with some of these products, but overall, over the long term, we just didn't see the growth potential," Calder said. Intel will continue to build and sell home-networking gear, he said.
Employees in the consumer division can apply for other jobs at Intel, Calder said. He wouldn't say how many people worked for the unit.
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