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How a Google-Powered Set-top Box Could Make a Splash

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It looks like Google’s (s goog) search robot will finally be crawling its way to your TV.  According to the chairman of Japan’s Open Embedded Software Foundation (OESF), several Android-based set top boxes will be shown in the fall at the CEATEC electronics show.

Will Android End Up Changing TV?

Set-top boxes (STBs) offering Android-type features are already popping up. Motorola (s mot) recently launched the open Linux-based ‘au Box,’ with a focus on establishing a stronger bond between video and music content, mobile phones, and the web. The box takes recorded media and transfers it to phones (taking the place of the PC) but the key is that it’s managed by users through the TV and includes a web browsing portal. It’s another small step to acclimate people to the long-awaited union of the web to TV, while ingeniously tapping on the heavy influence of mobiles.

Motorola has denied reports it is working on an Android-based box, but who are they kidding? The reason why some mistakenly thought Motorola’s box was Android was precisely because it fits the profile of something Google would do. It’s a placeholder for what happens next.

au-box1Sure, a box that only serves as a middle-manager for media center apps for phones might seem limited, but if you put Android on a TV, it might have far-ranging implications. Let’s take a look.

Because TV is an ad-supported environment and mobile phones are not, Google could finally have a successful TV version of its ad platform. Before the recession, optimistic analysts predicted that a ‘Googlebox’ could bring in huge TV ad revenue, upwards of $130 million a year by 2010. Though the struggling economy has lengthened that timeline, accessing web content through TVs is still the way of the future.

yahoo_tv_demoFor example, widget web streams that live on a graphic layer at the bottom of a screen are on the verge of mainstream availability. Earlier this year, Yahoo and Intel moved into that space by unveiling an open SDK that helps developers create TV widgets, are customizable enough to open up the personalization of ads, and a umbilical-type connection between STBs like the au Box and users’ phones will push that further.

But Yahoo’s widget program is still just a sliver of the web placed on top of “real” TV programming. The way Android can succeed is by taking the programming infrastructure away from the cable operators and reshaping and enhancing it in the manner of Web 2.0. This means personalized channels, smart virtual machines, short-form social communications (i.e. Twittering), and robust search functions. If you’re watching baseball on TV, you could switch to photo web feeds from people’s cameras at the game and receive their tweets on screen, with a graphic showing GPS coordinates of their stadium location. Creepy, cool, and useful!

Yes, cable operators will resist by fighting for control of any ad platform and will create their own deals with content providers, like they always have. But this is a rare instance where owners of the content pipe might be at a disadvantage. In the last couple of years, a lot of popular TV content has become widely available without monthly subscriptions through web portals like Hulu. Since TV makers are in the middle of a massive downturn and are looking to sell new sets, they’re also bound to help web companies free their TVs from old UI restrictions. Case in point, most top TV makers have already jumped on board with Yahoo’s (s yhoo) widgets program. Expect to see similar initiatives at NAB next week.

wiimenAndroid should take note of recent improvements to existing set-top boxes and game consoles, notably TiVo’s (s tivo) new, visually-rich search function, which gives users better show suggestions, and the Wii’s excellent menu, with its 47-channel customizable grid. A better path for Android OS might be to avoid the set-top box altogether and align with a TV manufacturer to create an affordable Google-branded TV. Better yet, Google could build the TV itself through a cheap OEM.

It’s important to note that in its short time (and despite many delays), the G1 phone has been fairly successful and the connection being developed between phones, PCs and the web might have stronger emotional pull for tmobile-g-11people than TVs in the near future. G1 sold more than a million units in a shorter amount of time than the iPhone (s aapl). Plus, far more phones are sold throughout the world than TVs. And as we’ve noted previously, the best TVs are being overtaken by cheaper versions of themselves, so it’s not like customers are clamoring for “best-in-class” displays. If they feel a web-TV is more useful and offers the best convergence of  technologies, especially with phones, that’s what they’ll choose.

We think the TV manufacturers probably need the web more than they think they do. They should give Google a call.

11 Responses to “How a Google-Powered Set-top Box Could Make a Splash”

  1. “avoid the set-top box altogether and align with a TV manufacturer to create an affordable Google-branded TV.”
    Excellent idea. And might not Google subsidize the TV purchase to lock in an ad revenue stream from a google TV user? Some variant of the cel phone model might work here. As you point out, price sells when it comes to television. I could see google making a huge splash in the tv market were they to attach their name to a product and subsidize sales.