Google TV: The Juicy Details Have Been Leaked
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The initial release of the Google (NASDAQ: GOOG) TV did not take off like many had hoped for; it was expensive, a bit clunky, and needed to improve to become a serious player in the TV industry. This summer the Google TV team promised more features and drastic improvements, and a sneak peak video that was temporarily displayed on YouTube showed that Google may be able to live up to the hype this time. The sneak peak video was publicly posted for a short time before being marked as private. In the video, Peter Sherman, Google TV Product Marketing Manager, ran through some features that were both innovative and enticing.
The two features that really stood out were second screen integration and improvements to Google search. Second screen integration is more than just substituting old remotes for smart phones and tablets. The application is meant to bring an extra dimension to movies and TV programs. The second screen (the screen on your phone or tablet) provides extra content, related information, or interactive applications that are linked to your TV. Improvements to search will allow users to use voice commands to surface content far more effectively than before. For instance, if you would like to watch Seinfeld, you can make a voice command for Seinfeld and all the episodes from live TV, Netflix, YouTube, Amazon, and other streaming services would pop up as results at the bottom portion of the screen. The mini-guide feature will open up at the bottom of the screen, and will allow users to continue watching their show on the big screen while flipping through their searches or channels for something else.
Google won’t be the first company to release a voice-controlled content TV, as Samsung Electronics has TVs on the market that recognizes hand gestures and voice commands with the assistance of a “Smart Touch Remote.” Samsung is the largest manufacturer of smart TVs, with more than 30% of the global market share. Panasonic Corporation (NASDAQOTH: PCRFY) is also on the innovative front of TVs, as their latest Viera line includes the Nuance Communications (NASDAQ: NUAN) Dragon TV platform, and allows users to vocalize channel choices or perform Twitter updates. Nuance is known for their underlying technology behind Apple (NASDAQ: AAPL)’s Siri voice-command service, and they are a provider of voice and language solutions for customers around the world.
In the recent years we have seen a shift in how people use TVs. The development of several new television initiatives such as Apple TV, the Roku Player, Boxee box and Google TV are all examples of connecting the Internet-enabled devices. Expect to see the next wave of television to take another step forward. The companies in the table above are all key players in the television industry and are working on developing TVs that will have broader capabilities and will change the way we tune in to our favorite shows and channels.
Looking at the table above, Google has the second highest P/E and EV/EBITDA, making it the second most expensive among the comparables. The massive search engine company also ranks second in terms of ROA, ROE, and their five year revenue CAGR. Apple ranks in the middle in terms of P/E and EV/EBITDA, and excels over all the comparables in ROA, ROE, and their five year revenue CAGR.
The initial AppleTV was generally viewed as a better product than the first Google TV, but tablets and phones have been the main force that has pushed Apple ahead of their comparables. Panasonic is the second cheapest company in terms of P/E and EV/EBITDA. The Japan based electronic manufacturer has the second worst ROA and five year revenue CAGR, and the worst ROE among the comparables.
Sony Corporation (NYSE: SNE) is the cheapest company among the comparables in terms of P/E and EV/EBITDA. The electronic, game, and entertainment company has the worst ROA and five year revenue CAGR, and the second worst ROA among the comparables. Looking at Nuance, the company is the most expensive, trading at 88.94 times their earnings with a EV/EBITDA of 23. The provider of voice and language solutions ranks in middle of the comparables in terms of ROA, ROE and five year revenue CAGR.
The leaked features of the new Google TV have led many to believe the new product will be a game changer that reshapes the way people watch TV. On top of those key features, it’s important to recognize how Google has made strides in turning YouTube into a site that can potentially compete with the major networks. Even after being shut down by the major cable networks, Google has made a push to expand their content on YouTube. Today tens of millions of people have created channels on YouTube. Looking at YouTube’s suggested channels bar, the platform has positioned itself to keep users on the site by offering a variety of tailored channels that appeal to nearly every taste and preference.
The appeal of Internet TV will continue to grow as television and software companies push for innovation. We expect the upcoming Google TV to be a much better product, as features like second screen integration and improvements to their search are implemented. Another catalyst for the success of the new Google TV is YouTube’s improved quality in its offerings and expanded content base (Click here to see if Google can compete with cable networks).
We believe if Google can continue to progress in facilitating full-length TV shows, they will be able to leverage their customized channels to compete with major broadcasters. Google has been at the innovative front in everything from their notorious search engine to the development of the driver-less car. The first Google TV left many with a bitter taste in consumers’ mouths, but if the leaked details are any indication, Google should impress with the second generation of their device.
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This article is written by Mike Pate and edited by Jake Mann. They don't own shares in any of the stocks mentioned in this article. The Motley Fool owns shares of Apple and Google 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 Nuance Communications. 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.