How Will This 3D Imaging Buyout Help Drive Intel's Growth?

By Markets Fool.com

Image source: Intel.

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The intersection of technology and sports is likely to grow even further in coming years, something few tech executives understand better than Intel CEO Brian Krzanich.

In a February op-ed in Sports Illustrated, the Intel chief executive evangelized the increasingly prominent influence technology will have in the future of sports, which, as he sees it, should increase the experience for athletes and fans alike.

Posturing? Perhaps. However, Intel clearly isn't afraid to put its money where its mouth is, as its recent purchase of 3D imaging provider Replay Technologies shows.

Intel gets sporty
Earlier this month, Intel finalized its acquisition of Replay Technologies, whose "proprietary freeD format uses high-resolution cameras and computer-intensive graphics to let viewers see and experience sporting events from any angle," according to Intel. Though neither party disclosed the financial terms of the deal, The Wall Street Journal reports the sale price likely fell in the range of $150 million to $170 million.

The two firms first began working with one another in 2013, and their partnership has led to a number of highly immersive content viewing experiences. At this year's Consumer Electronics Show, Intel and Replay presented an interactive version of Replay's 3D viewing technology on third-party devices.More recently, the NBA also used the joint Intel-Replay consortium to power a view of the high-flying Slam Dunk Contest at this year's NBA All-Star Game in Toronto.

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Image source: Replay Technologies.

According to Intel, Replay's technology combines high-resolution cameras with highly detailed computer graphics, which leads to a viewing experience that provides the feeling of a truly three-dimensional presentation. What's more, the industry and its technological components are likely to play an increasingly prominent role in Intel's post-PC era growth strategy.

Right time, right place
In many ways, Intel's acquisition of Replay Technologies reflects the company's broader strategic shift in recent years. As PC sales growth dwindles thanks to the rise of smartphones and tablets, Intel has been forced to develop products and solutions that cater to today's tech industry growth verticals. In recent years, Intel has developed either products or prototypes in industries including wearable fitness trackers, smart jewelry, drones, connected homes, and AR/VR headsets. And while it might seem odd that the world's largest semiconductor producer is now dabbling in a product category as far flung as smart jewelry, all of its efforts -- in some way, shape, or form -- involve placing Intel's chips into an increasingly diverse set of devices, or the devices required to process the vast amounts of data they produce.

Reviewing Intel's press release on the deal, it doesn't require much reading between the lines to get a sense of how Replay Technologies complements its non-PC growth plans. "The ... technology created a seamless 3-D video rendering of the court using 28 ultrahigh-definition cameras positioned around the arena and connected to Intel-based servers... Together, we will scale this new category for sports entertainment that we callimmersive sports, which ... requires the high-performance computing Intel is known for ... "

This is a server chips sales play for Intel, pure and simple. By scaling the kind of data-intensive video content Replay Technology provides, Intel hopes to drive increased demand for its server chips, which have proven a lifeline for the chip giant amid sagging PC sales. In Intel's full-year 2015 results, the company saw its PC chip division sales decline 8%, while its server chip unit enjoyed a healthy 11% increase in its sales. And by purchasing Replay Technologies, the company shows that it pretty clearly believes it has found a new technology to help fuel the continued growth of the server business it so badly needs to buoy its top line in the years to come.

The article How Will This 3D Imaging Buyout Help Drive Intel's Growth? originally appeared on Fool.com.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.