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Summary:

The consumer electronics industry is always looking for transformative technologies that can drive entirely new product generations. And while smart TV is still in its early stages, the ultimate promise of the transforming the TV to a service platform holds much more promise long-term than 3-D.

tv
At CES 2010, the entire TV industry seemed to think 3-D’s time had come. After all, Avatar‘s record-breaking run was still unfolding and theatergoers were donning 3-D glasses in droves, and to the industry, there seemed no better time to push the technology into the home.

Too bad consumers didn’t see it this way. Shipments disappointed, and many consumers became convinced  they’d never want to watch 3-D in their homes.

The biggest blame is with the CE industry, which did a lousy job of educating consumers about the simple fact that 3-D-capable doesn’t mean always-on 3-D, and that’s an important distinction lost on most consumers, since no one — well almost no one — wants to watch 3-D all the time.

The industry knew it had to look elsewhere as the clock ticked on rising HD market saturation. Fortunately, the groundwork for a new model for hardware had been laid by the mobile handset brethren, and now many in the TV industry have seen the light.

If you have any doubt that big-time TV OEMs are taking cues from the smartphone market, see these words from BK Yoon, President of Samsung Displays, in this article from Silicon Republic:

“If you think about the traditional telephone and the smartphones we all have today, I believe that TV will see as dramatic a reinvention as the telephone. In 2011, we just watch TV that was prescribed, but TV is changing fast and people will choose to watch what’s relevant to them. TV’s reinvention has already begun.”

So what did Yoon and others learn from the handset market? It’s simple: By adding additional processing, connectivity and software platforms for development of applications, you can fundamentally shift a market’s entire business model. Previous to what Apple did with the iPhone, the carriers largely called all the shots in the mobile market. Today, I’d say Google and Apple are almost on equal footing.

Looking at the TV market, Samsung gets this and is already negotiating direct deals with content providers to put paid content on their smart TVs. And there are others are asking for application and content service revenue splits, and are no doubt also looking at advertising revenues.

Being a smart TV OEM is a long way from just shipping boxes, whether they’re 3-D or not.

If you’d like more analysis on how smart TV’s fundamentally shift the business model in the TV market, see my weekly update at GigaOM Pro (subscription required).

Image source: flickr user ETC@USC

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  1. It may not happen but what if apple comes out with a 27 inch iMacTV with an iTouchRemote…….. now that would shake up the biz.

    :):):)

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  2. If TV OEMs play it smart, they’re going to win big time from TV’s reinvention. They may even get a healthy slice of advertising/app revenue that is going to demolish today’s TV programming market. More streams of revenue, (especially the kind that come from zeros and ones) for TV OEMs:

    - means a lift to their paltry hardware margins;
    - means TV OEMs taking more risk to innovate and differentiate
    - means consumers could have increasingly better living room experiences which has been changing at a snail’s pace for the past 20 years;

    All we need now is Verizon to stick LTE chips/WiFi cards inside of TV’s and we can watch Comcast whither away. If this happens quickly enough, Sarah Palin might even lose the upcoming election because FOX viewers wouldn’t be able to find her on these new TVs. Sorry.

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    1. I think the idea of LTE in TV in interesting, though I have no doubt that a carrier could only offer interactive data to passthrough and couldn’t offer video streaming, as there clearly isn’t enough room on the wireless network for mass-market HD video unicasting.

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  3. The analogy with the mobile industry is a good one but misses some key points. The internet connected TV industry is following a similar path to internet connected mobile devices a few years ago.

    - HW players try to be the first point of experience (handset=TV). Create a proprietary view of web.
    - Service providers try to control access (walled garden=not real internet). You can only see what the service provider allows you to.
    - Consumers sold “web on your Handset” when its not open web, result is poor view of the service and not many using it. Similar to walled garden TV. “Watch web video on your TV” has different interpretations with different consumers.

    - Open web is enabled, then users really start to use the web on their phones. They get to see on their phones what they can see on their PCs. Will the TV industry allow this?

    We are still in the ‘beginning of the beginning’ of this evolution. It will be interesting to see how quickly consumers understand the differences between systems and platforms, and whether they buy a connected TV because it is connected, or because it just happens to be.

    Ben

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