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Summary:

Google’s acquisition of Motorola Mobility could be a big boost to Google TV, and could signal a shift in its positioning from an operating system that Google sells to consumers to one that is used by a number of pay TV operators instead.

vizio google tv

Google’s acquisition of Motorola isn’t just about the Android mobile market. In addition to giving Google some mobile hardware capabilities and patent coverage, the purchase could also be a big boost to Google TV. But to make that happen, Google TV will need to shift its positioning from an operating system that is sold to consumers to one that will be used by a number of pay TV operators instead.

Google TV has been a flop

Introduced to much fanfare last year, the first generation of Google TV products has largely underwhelmed consumers. Logitech, which invested heavily in the OS with its Google TV Revue set-top boxes, has taken a huge hit from the lack of interest in the product. It recently slashed the price of the Revue boxes from $249 to $99. Sony has also heavily discounted its first generation of Google TV products, slashing the price of its entry-level 24″ Google TV product in half.

While the second iteration of Google TV shows a little more promise, with a more open app ecosystem and improved user interface, Google would still largely be playing catchup in the home device market. Apple has sold more than a million Apple TVs, and Roku is on pace to have more than 3 million of its streaming boxes sold by the end of the year. That’s not even counting the millions of TVs and Blu-ray players from manufacturers like Samsung, Vizio and Toshiba that all have their own app ecosystem.

Motorola adds the scale, credibility Google TV needs

Google TV will get some benefit from existing Android applications, as they can be easily ported over to TV products. But with so few actual devices sold, Google might have difficulty giving developers a reason to build TV-specific applications, especially when there are so many other TV operating systems to choose from.

That could all change, as Google just bought a very strong player in the set-top box and home devices market. According to Infonetics, Motorola Mobility was the leader in set-top box revenues last year, and was also tops in hybrid IP/QAM set-top boxes — that is, the boxes used by operators like Verizon that combine broadcast TV and over-the-top applications. By leveraging Motorola’s position with carriers, Google can better solidify its bid to expand Google TV and Android into the living room.

On the call announcing the deal this morning, Motorola Mobility CEO Sanjay Jha pointed to Motorola’s strong relationships with pay TV operators and noted there is a transition underway, as operators shift from traditional set-top boxes to IP-connected boxes. “There is great convergence between the mobile world and content that comes to the home through set-top boxes. Working with the carriers, we’ll be able to accelerate that convergence which will excite customers.”

Google TV could accelerate operators’ shift to the cloud

Many operators are using IP-based services in a bid to improve the user interface of and add applications to their set-top boxes. Comcast, for instance, recently unveiled a new cloud-based UI for its set-top boxes, and other operators — like Time Warner Cable and Cablevision — are looking to follow suit.

Until now, most set-top boxes have run proprietary operating systems. As a result, offering up Google TV as the underlying OS could simplify and accelerate the rollout of new applications on cable systems, which could improve the overall user experience on the set-top box. And by pitching Google TV as the underlying OS for Motorola set-top boxes sold to TV operators, it could very quickly create a large install base for developers to build applications for.

The one question is how open that set-top box will remain if Google shifts from a consumer- to a carrier-based model for Google TV. Operators in the TV space have been notorious for keeping their set-top experience a walled garden, and it’s unclear if they’d be willing to have their live TV and video on-demand services alongside applications like Netflix or Hulu Plus. Then again, before the iPhone and Android took over, no one thought the mobile operators would embrace an open app ecosystem on mobile handsets either.

  1. GoogleTV was only a flop because it was over-priced. There is no way the Revue should have cost $249, as neither its manufacturing cost nor the market justified that price. They are probably clearing inventory at $99, so they may not get to see what really happens at that price, but for $99, it’s a far better deal than the Roku or Apple TV competition. Sony also overestimated its value when integrated into a TV set; it probably added maybe $20 to the cost of the TV, but they jacked up the price a lot more than that.

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    1. Ken, We’ve covered this pretty extensively. The reason that Google TV products were so expensive is that the cost of materials were pretty high. The Intel chip and dedicated Flash memory needed to power those products added a heavy premium to production costs. Most likely Logitech and Sony are now taking a loss on the discounted Google TV products to clear inventory. http://gigaom.com/video/google-tv-is-pricing-itself-out-of-the-market-2/

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      1. ARMdevices.net Monday, August 15, 2011

        Yup, they should have used the ARM Processor as the main platform to support the Google TV ecosystem. That’s what they are doing now and that is how Google TV is going to be a huge success.

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      2. This is in response to ARMdevices.net, but there was no submit button associated with that post.

        As I’ve been working with my Revue over the past couple weeks, I think the decision to go with Intel was predominately for the CE4150 SoC chip. I believe this was the chosen platform to debut Google TV because it greatly satisfies the concerns of the content providers. The security on this device has definitely impressed and frustrated me. I’m not aware of any ARM equivalent that integrates the security aspects and high video performance, simultaneously capturing and broadcasting 1080p.

        Sure, ARM may have been a less expensive processor, and from that standpoint, brought the manufacturing costs down, but what Intel provided, made the platform as user (un)friendly in the eyes of the entertainment industry.

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      3. They didn’t need an Intel chip to run this box. That was their choice, but it made the product too expensive. They could have used a cheaper ARM or even MIPS device, as there is nothing this box has to do that can’t be done on single chip media players. Also, 2 GB of flash would be plenty, and even when this product was introduced, that wouldn’t have cost more than $5 (now a lot less).

        The $99 Roku and Apple TV boxes have enough power to do what the Google TV does, and they aren’t losing money on them. Even if it was another $30, it would have been in the ballpark, since it came with a keyboard, but Logitech wasn’t even close. Making inappropriate design choices doesn’t invalidate the market, unless you are saying the product is possible without those components. I am certain it is.

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  2. Google TV failed because there was no content available, and there was no content available because the MSO’s wouldn’t allow it.

    Owning a set top box manufacturer is not going to solve this problem, because the MSO’s see Netflix and Google as two of the biggest threats to their business. With this announcement, I’d bet they are meeting today to figure out how they can move the remainder of their STB purchasing to Cisco, Thomson, Pace, and Samsung as quickly as possible.

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    1. ARMdevices.net Monday, August 15, 2011

      Yup, TV/Cinema even the politico-mediatico industrial apparatus (blabla) are scared shitless by the Google TV idea. The only way is for Google to push forward for Copyright reform and provide a reliable revenue generation on YouTube for all types of content creators, from the small independent, to the very big independent content creators. The next Mad Men and the next Dark Knight have to be produced and distributed on YouTube. Until politicians all pass Copyright reform (flat fee for all content access), then a simple BitTorrent/ftps-streaming/vpn app can take care of the content needs of the users until then

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      1. No that’s not quite true. They could sell a RETAIL product (bypassing the MSO’s who might toss the Google TV software on the floor, or force it to submit to restrictions by the media companies who they are slaves to) AND they could fight the good fight against restrictions. Remember when Boxee was updating their software in a running battle with Hulu TV to make sure Hulu (free) ran on Boxee? Before they gave up? Google could do that. Make it impossible to distinguish a Google TV box from a laptop running IE say (video doesn’t work? push this button and we’ll lie to them and try again). Force the media companies to either play video over IP or NOT.

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  3. Jason Thibeault Monday, August 15, 2011

    There is a huge battle looming over the “family OS:” the platform that a family will standardize on for mobility, entertainment, etc. Right now, it seems that Apple has the lock on that (iTunes is a platform that goes across mobile and TV, not just a poorly-designed app to manage music and video). This acquisition, with all of Motorola’s set-top box assets (those are part of mobility), provides Google a lot more to build upon in that looming battle. But this acquisition is more than that as well. It’s about getting close to carriers (something Apple already has). And with the explosion of mobile data usage, Google needs this relationship in order to continue growth in its core ad business (about 97% of its revenue; there might be some credence to divesting that with this purchase but that remains to be seen). If they get hooked to the carrier as a handset manufacturer, they could potentially integrate core Google software in the device and OS (specific to the handset, not the general Android kernel) that would be VERY enticing to carriers to generate incremental ad revenue of which Google takes a spiff. Regardless, this is a really good acquisition for Google and Motorola.

    http://blog.jasonthibeault.com/index.php/2011/08/15/why-google-motorola/

    j

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  4. The MSOs have a long history with Motorola hardware. If they don’t want Google in, Google won’t get in, but they just bought themselves a lot closer. I’m sure a lot of MSOs (execs, etc) had some Motorola Mobility stock as well.

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  5. ARMdevices.net Monday, August 15, 2011

    But Google TV is going to kill existing Pay TV. So try again

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  6. Am I missing something, or wasn’t Google’s acquisition of Motorola MOBILITY? As in the part SPLIT FROM THE SET TOP BOX business?!

    This helps them none at all with Google TV. Motorola’s other division owns it.

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  7. Hardie Tankersley Monday, August 15, 2011

    That headline is only true if you define “Google TV” as some new product completely unrelated to the current Google TV.

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    1. @Hardie – It’s true, the Google TV I’m talking about is not the product launched last year, but the idea of Google TV as an operating system for set-top boxes and Internet-connected devices in general.

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  8. Sheila Irene Hughes Crone Monday, August 15, 2011

    Since Google TV doesn’t offer closed captioning, I won’t be interested in their offering as well as many others who are hearing-impaired.

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  9. As others have mentioned, MMI’s customers are the MSO’s who hate the idea of Google or any other app/service cutting them out of the loop, not the end consumers. The GoogleTV will always be a flawed consumer device; they will never be greeted with open arms into the MSOs’s world of settop boxes. Not a help at all.

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  10. my ATV, or is it aTV, appears to have been laying in development, I welcome the competition!

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