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Google TV Must Battle Market Confusion

5/21/2012 12:01:00 AM Eastern

NEW YORK – This week, LG joins Sony in delivering to
market a Google TV line that brings the Android platform to
the big screen with a new brand.

But market analysts said that LG and Google will have
their work cut out trying to make an Apple TV-like stir
around the alternative smart-TV platform.

A badly executed early launch left Google’s Android system
for TVs struggling to whet consumer appetites, despite
claims to provide seamless integration with Android mobile
devices and a PC-like browsing experience on the TV
screen.

After almost two years in the market, sales of initial
Google TVs from Sony and Google TV-enabled set-top
Revue boxes (the latter of which is now discontinued by
Logitech but announced as coming soon in a new form
from Vizio) remain small niche items of a North American
connected TV market.

Paul Gagnon, NPD DisplaySearch North American TV
market research director, estimated that connected TV now
reaches about 35 percent of the North American market,
up from 22.5 percent last year.

“A number of factors have hindered success of Google
TV, but primarily the industry’s emphasis on 3DTV and the
variety of connected platforms competing for consumers
helped to bog down overall adoption,” observed Tamaryn
Pratt, Quixel Research principal. “Most of the big manufacturers
want their own ecosystem or taste of the Apple success,
and it almost seems like this is a backup scenario.”

Most analysts agreed that consumers are confused
when they hear two stories about Internet-enabled TV from
one manufacturer, like Sony, as the company continued to
market a line of Bravia Internet Video TVs as it unveiled its
competing Google TV alternatives.

It appears LG is about to do the same thing. It already
offers lines of TVs empowered by the LG Smart TV system,
which the company promotes vigorously. That system offers
links to a number of premium steaming-movie services,
including Netflix and Vudu, while LG Google TVs lack Vudu
but offers Netflix, HBO Go and Amazon on Demand.

Tom Morrod, IHS TV technology senior principal analyst,
said, “Betting on Google TV isn’t the same as betting
against your own platform yet. It’s simply a hedge on the
basis that Google might be a winner here, and if it happens,
it could happen quickly, such as with an Apple TV launch.”

Still, analysts said that adding two IPTV systems under
one brand risks making the purchase proposition confusing
not only for consumers, but retailers as well.

“It does send a mixed message. If [the dual IPTV platforms
are] not clearly messaged by manufacturers, it adds
another layer of complexity in the decision making process,”
Pratt said. “Clearly, it would be a great scenario for smaller
TV brands as a quasi-standard, and that may in fact help
the overall penetration of Google TV.”

Morrod of IHS said that some manufacturers’ proprietary
connected-TV platforms are doing well, particularly Samsung’s,
“but there is consumer demand for a clean platform
to choose from and to use across all devices and across all
the TVs in their home. Google TV/Android-based TV does
this nicely. Most of the brands are honestly going to be very
pragmatic about the platform they run — there is money if
they do it right — but they are all in the business of making
hardware at the moment, and there is a lot to be lost if they
do it wrong.”

On the surface, it appears that Google TV’s best bet
would be to provide a one-stop-shop connected-TV platform
to smaller TV brands that haven’t already made a large
investment in a proprietary solution.

“From the Google TV camp, it makes sense to want the
big players to embrace and support their platform, but
that is not what appears to be taking place right now,”
said Pratt.

Morrod of IHS said the rollout of Google TV with major
brands like Sony and LG “has more to do with associating
top brands for quick mindshare penetration among consumers
than with implementation barriers.”

Manufacturers have opted to add secondary
lines of TVs based on the Google TV platform
“to leverage the Google brand, which is very familiar
to consumers, and also as a way to work on
the development of Android applications for TV,”
added DisplaySearch’s Gagnon. In the future, he
said, “Google TV may be an ingredient in smart-
TV platforms, or a stand-alone for some brands,
but probably some combination thereof.”

LG’s new sets are based on an older version
of Android that was code-named Honeycomb.
Gagnon pointed out that one PC maker is already
taking Google TV to the next step.

“Lenovo is launching a line of smart TVs in
China using [Ice Cream Sandwich-based system
linking the TV monitor with a handheld Android
mobile device], kind of like a giant tablet,”
he continued. “There is still debate about which
approach to where the intelligence resides is
best. Some propose the TV is the best location
while others view the TV as a good monitor, and
the system’s intelligence should reside in a device
already found in the home like a set-top-box
or a tablet.”

Eventually there will be many ways to watch
“TV” and on many devices, said Quixel’s Pratt.
“TVs themselves will probably always be the
gateway to entertainment due in large part to
their size,” she said.

Early results from a Quixel consumer study in
development indicates the eventual winner of a
smart-TV “platform war” will have to provide content
mobility on mobile devices in a way that is
both easy to use and understand, she added.

“Consumers have a variety of different devices
and different platforms, and at the end of the day
they want to watch what they want, when they
want to,” said Pratt. “Connecting, using, downloading
and streaming on all these different devices
is still not easy and really just confusing
and frustrating, even for many Apple product
owners.”

The “A” word may be the biggest variable in
the new connected-TV equation, and could be
the biggest catalyst to adoption of the Google
TV platform.

Morrod said he believes, initially, Apple will
aim for 0.5 percent of the market (1 million or so
sets) while taking 30 percent margin.

“The aim will be to reinvent the business model
for TVs so that the hardware can cash in on the
success of subscription pay-TV revenue and differentiate
on services/UI/platform/integration.”

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