A few weeks ago I was arguing with some folks about what Apple would announce at this year’s WWDC. Given that we knew Apple would announce the next gen iPhone (thanks Gizmodo), there wasn’t much fun in making predications this year. So, our debate shifted to what we hoped Apple would announce (acknowledging the unlikelihood of anything major beyond iPhone 4).
I was most excited about the rumors circulating of a new Apple TV based on iPhone OS 4 and offering cloud-based media streaming, including 1080P video. Admittedly, I’m one of the few people who actually owns and uses an Apple TV. Despite it’s limitations, it’s still the best living room video-on-demand experience for premium TV and movies (yeah, Netflix streaming is great, but their catalogue sucks – Breakfast Club anyone?). All told I watch more content delivered via iTunes/Apple TV than my Tivo HD, Vudu and PS3 combined.
Anyway, the idea of a new cloud-based Apple TV based on the iPhone OS made perfect sense to me. This would allow Apple to extend the reach of their platform ecosystem (iTunes, apps, media, devices) to the living room. It would be the Papa Bear of the iOS device family, perfectly complimenting the iPhone and iPad. The implications for console gaming alone would be huge. Who would still buy a Wii? Game developers could write universal apps for iPhone, iPad and… iTV? The iPhone or iPad could be used as a remote control, keyboard and game controller – made significantly more powerful with iPhone 4′s new gyroscope capabilities. And that’s just games. If an iTunes-in-the-cloud streaming service (based on Apple’s acquisition of Lala) was on the horizon, a logical extension of that would be 1080P video streaming. Add to this Google’s recent Google TV announcement and it all made perfect sense.
Well… not only did Mr. Jobs not announce the next gen Apple TV at WWDC, he actually went out of his way a few days earlier on stage at the D8 show to disparage the very idea. Basically he said that there’s no viable path to market for new TV platforms. According to Jobs, people won’t pay for a set-top box when they already get one free from their cable operator – Tivo’s difficulties are proof of this and Google will soon learn this lesson as well. He then goes on to say that the only way to be successful is if you start from scratch, build a great experience and get it to the consumer in a way that they’re willing to pay for. But again, according to Jobs this can’t be done in what is essentially a cable subsidized industry.
I think he’s right about most of this. It would be very difficult for Apple TV to be successful for all the reasons he described. But what if these capabilities were built into the TVs people bought and they didn’t have to buy another set-top box? Wouldn’t that address the problem of getting it to the consumer in a way that they’re willing to pay for? The problem is this would never work for Apple because Apple, as we all know, is about controlling the entire ecosystem and experience, from hardware to software to services. They would never OEM the iOS to run on a third party TV. And for good reason. Remember Apple’s first attempt at a phone – the disastrous Motorola E790 Apple iTunes phone? Like the PC, music player, phone and tablet markets before, the only way it makes sense for Apple to get serious about connected TVs is to build an actual TV (on one hand this sounds far fetched, on the other, inevitable).
Not so Google. While Apple would need to build a TV to stay true to their ethos and address the go-to-market issues, Google, as exemplified by their Android handset strategy, is all about partnering with hardware manufacturers. In the case of Google TV, the most important of their initial launch partners is Sony. Sure, the Logitech box sounds neat, and will likely be adopted by AV geeks who don’t mind maintaining a rack of peripherals, but to Jobs’ point, most consumers don’t want another box when they already get one for free (or a nominal rental fee) from their cable operator. Enter Sony, who will be releasing the first TV to integrate the Google TV platform.
Sony, a once great electronics company whose market share on multiple fronts has been eroded by competition and market dynamics, desperately needs a hit. And Google TV, much more so than 3D TV in my opinion, may be just what they need to ignite a real turnaround (provided of course they don’t drop the ball on pricing, marketing, etc.). The Sony partnership paves the way for Google to deliver their TV platform to consumers in a way they’ll pay for, a new TV – directly addressing Jobs’ key concern of go-to-market viability. Provided the launch is successful I can only assume that other TV makers will rush to market with competing Google TV sets. It will also be interesting to see how Sony’s content holdings will play into this. Will Google TV provide a channel for direct delivery of Sony owned content? I have no idea but the possibility is interesting on several levels. We’ll see.
Having Google TV baked into TVs will be key to the platform’s success, but the main reason Google will succeed where others haven’t is the fundamental difference in their approach. This won’t be a separate, or alternate input to the primary TV viewing experience (like Apple TV, Boxee, Vudu or Roku). Nor will it be limited to standard cable/satellite content delivered through a better DVR (like Tivo). This will be the television experience. Forrester analyst James McQuivey put it best in the piece he wrote for paidContent last week:
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.
By partnering with leading CE manufacturers and taking a much bolder, more complete and immersive approach to the connected TV experience, Google is poised to reach and engage the millions of viewers who spend 4.5 hours a day watching TV, and by extension tap into the $70 billion dollar broadcast advertising market. For Google, this is clearly much more than a hobby.