Google TV: Still Disappointing
David is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
“By the summer of 2012, the majority of the televisions you see in stores will have Google TV embedded in it,” According to Google (NASDAQ: GOOG) Chairman and former CEO Eric Schmidt. Since Mr. Schmidt made those comments in December his prediction has not come to pass. While Google announced a number of new partners for Google TV including LG, Samsung and Vizio among others, Google TV is not on more than 50% of TV’s. Now, Schmidt says things that don’t quite come to fruition all the time. However his predictions failure does raise the question of why, not only Google TV, but its competitors such as Apple (NASDAQ: AAPL) TV and Roku have failed to sell ten million units combined.
Nielsen estimates that in 2012 there are 114.7 million TV’s in the US, with 96.7% of all US homes having at least one TV. NPD reported that in 2012 the average age of TV’s before they get upgraded has dropped to 6.9 years. This means that TV’s are not viewed as consumable products that users can replace every few years when a new model comes out. Though this may change as TV prices continue to drop, but for the moment TV’s are not replaced as frequently as computers or phones. Because of this slow update cycle and the rapidly evolving internet connected TV technology; it would be wise for companies like Google and their partners to focus on devices that connect to your TV. This would give your TV added functionality rather than requiring consumers to upgrade their TV every few years when new technology comes out.
We have seen this with the newly announced Sony (NYSE: SNE) Google TV box. The NSZ-GS7 as it is stylishly called is now available for pre-order. With a price of $199 that puts it at twice the Apple TV and more than twice the entry level Roku. Even with a pretty nifty new controller this hefty price point will dent initial sales of the new Goggle TV box. With IHS iSuppli predicting a 5% drop in flat panel TV sales for 2012, selling complimentary set top boxes to upgrade the functionality of your existing TV is the way to go, but the $199 Google TV box may not be the way to go. The latest Apple TV has sold as many units in the first half of 2012 as Apple TV did in all of 2011, signaling a growing appetite for these content boxes. A new version of Google TV launched at the Google I/O which could be the beginning of a successful Google TV.
In order for Google TV to see quick adoption it needs to come in many different forms besides just a full TV set. Set top boxes, Blu-Ray players, multiple manufacturers and multiple price points all need to come together to see Google TV catch on. There is no clear winner in the connected TV world at the moment, but Apple is rumored to be developing a new TV for release later this year. If there is any company that could get consumers to upgrade their TV’s more than once a decade, it is Apple.
This Apple TV rumor is why Google needs a whole lot more than a line or two of quasi good devices from one or two manufacturers. With the half dozen or so new hardware partners Google has brought on board, the Honeycomb update and the upcoming Google TV update at Google I/O, Schmidt may well have thought that we would see more Google TV’s on the market by now. However Google TV is now being outsold by the ‘hobby’ Apple calls their Apple TV. Additionally, traditional video game consoles such as the Xbox and PlayStation are moving toward entertainment devices that will put them in direct competition with Google and Apple TV.
A leaked document from Microsoft (NASDAQ: MSFT) has even hinted that at one point Microsoft was targeting their next generation Xbox for a price point of $299. A price far lower than most new consoles. Microsoft is also putting significant effort into getting content providers to make apps for the Xbox such Comcast and HBO. Newly announced features like SmartGlass are designed to further integrate all of your Microsoft devices into a platform that will be increasingly difficult for Google to compete with.
A $199 Google box from Sony is not enough when the Wii is less than $199 and the Xbox 360 is now under $299. Especially when the Roku starts at $50. Google has a major opportunity to bring its ecosystem and YouTube content to your living room, but thus far they are not executing on this potential. Should Google TV's woes not be resolved at the Google I/O, they will be permanently surpassed by Apple TV and various video game consoles that are now positioning themselves as entertainment devices.
ded004 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Apple, Google, and Microsoft. 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.If you have questions about this post or the Fool’s blog network, click here for information.
