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Intel and Google appear close to announcing a deal with Sony for Internet-enabled TVs at a Google developer conference this week in San Francisco.

The deal would help Sony to differentiate itself in a challenging and highly competitive marketplace for television sets. Last week, Sony reported pricing pressure on its Bravia LCD televisions, contributing to a half-billion-dollar loss in Sony's consumer products and devices division.

Intel has been actively gearing up for the past year to provide both silicon and software to Internet-enabled TV ventures, according to Eric Kim, SVP and GM, digital home group, Intel Corporation, speaking at a May 11th investor presentation. Read More

On the silicon side, Intel has an order backlog of one million units of its second-generation "System-on-Chip" (SoC) Intel Atom CE 4100, which entered production in December 2009. Customers include France Telecom and other major service providers, cable operators and IPTV operators to be announced.

On the software side, Intel has developed a consumer electronics (CE) operating system based on MeeGo Linux. The OS will support legacy CE middleware, including various systems developed by broadcast and pay-TV providers around the world, as well as fully-capable Internet applications including HTML5, OpenGL, and Adobe Flash 10.1. "When vendors say, 'We support Flash,' it usually means Flash Lite," said Kim. "We provide the performance headroom to run Flash without any constraints."

Intel's previous software framework, Widget Channel, was developed in conjunction with Yahoo! to enable developers to build small applications to enhance the viewing experience.

With the reported deal, Google, along with its developer community, would have a prime position to provide applications and content optimized for the Intel framework. In addition, the delivery channel opens up new methods of delivering user content, presenting contextual advertising, and gathering user information.

However, Intel's Kim was careful to point out that the latest generation of smart-TV technology was intended to complement existing networks and providers rather than attempt to replace it entirely. "We thought it was important to embrace the broadcast legacy infrastructure," said Kim. "These players invested billions into infrastructure, and they're not going to throw it away."