Google TV was among a series of recent announcements by the company, and while it may appear to be a smaller part of the search giant’s overall business, it’s actually hugely important. This hasn’t stopped many from wondering why Google should care at all about moving into the TV space.
“Some have expressed surprise that Google would even care about TV in the first place,” writes James McQuivey. “After all, Google takes nearly $7 billion dollars into its coffers each quarter from that little old search engine it sports, a run-rate of $27 billion a year. In fact, this has long been a problem Google faces its core business is so terribly profitable that it s hard to justify investing in its acquisitions and side projects that have zero hope of ever contributing meaningfully to the business (not unlike the problem at Microsoft where Windows 7 is Microsoft). So why would Google bother with the old TV in our living rooms?”
Still, the TV advertising business is worth $70 billion annually, despite the advent of other media, and results in roughly $25 billion in consumer-electronics sales. Google wants a slice of that pie, and they think the timing is right on Google TV.
“Yes, it’s hard. Yes, it has been tried before. But no, Google TV is not in the same situation as Roku, Vudu, Boxee or even Apple TV,” writes McQuivey. “Google TV is different; it s more ambitious yet more likely to succeed. First of all, timing matters. With broadband penetration at two-thirds of U.S. households higher in many European and Asian markets and with home networks in more than a third of U.S. homes, the base layer of high-speed connectivity to and in the home can support Google s ambitions. Plus, there’s enough content online between YouTube, Hulu and Netflix, to make it worth the bother of connecting the TV (which, by the way, is why nearly 10 million homes in the U.S. connect their PCs to their TVs to watch that content today, so Google s asking us to do something millions of us already do).”
Google TV should not only benefit from numerous features, but also the partners to make it happen. While Intel and Logitech are important partners, they won’t provide the experience necessary for such a product.
“That’s where Sony comes in. Sony has been selling connected TVs for longer than any other TV maker,” writes McQuivey. “It obsesses about R&D and its connected TVs are actually relatively robust compared to some others that rely on cheaper silicon and have a less elegant user interface. Yet Sony willingly set that technology investment aside giddily, as Sir Howard Stringer himself said and tied its fate to Google TV. This will make all the difference, giving Google TV a shot at reaching millions of homes by year-end 2011.”
Sony’s experience in the TV market will cause the competition to take things more seriously. Other TV manufacturers will focus more on it, cable companies will accelerate their trans-platform solutions and Apple will likely have to respond.
“In fact, Apple will kick itself that it didn t tackle TV in a similar fashion sooner,” theorizes McQuivey. “Jobs has admitted the Apple TV was a hobby and has painted the entire TV market as nearly impossible to overhaul. But he’s hiding from the fact that his solution and all the other solutions tried so far didn t really bring the kind of power to the TV that Google TV will. The Apple TV, on a good day, is capable of taking your attention for no more than an hour, two at most, and then only if you have paid to rent or download a movie from iTunes. That s an infrequent scenario at best. Google TV will be a persistent interface that resides on your TV, giving you access to search functions (searching linear programming, web video, and even the general Web to get IMDB facts or background on the season finale of Glee) any time you re watching TV, not just when you switch the input.”
“It’s a critical difference that makes Google TV unique compared to all previous attempts to ‘Webitize’ the TV. And it’s the difference that will matter at scale, thanks to TV manufacturers that will support it. And it s the difference that will matter to developers, who will want to appeal to millions of consumers through a persistent interface, not a sidekick box in the living room. That’s why Google TV is bigger than you think it will occupy more of your time and attention than you think. Then, once it has your attention, it can begin siphoning away ad dollars. Oops, did I just reveal the nefarious master plan? You bet I did,” he concluded.
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