Google TV: Can Google Prosper Where Apple Failed?

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Wall Street Cheat Sheet submits:

By Elliot Turner

The (Insert Name) TV. Apple ( AAPL ) gave it a try not that long ago, and now Google's ( GOOG ) giving it its own go. I must say that Google seems to have put forward a robust, well-rounded attempt to conquer what has thus far been the most important, yet failed endeavor for the Y2K and beyond tech industry: to seamlessly integrate the computer/web-browsing experience with traditional tv and movie media. Microsoft ( MSFT ) tried with its purchase of WebTV long before Apple gave it its own shot not too long ago and next to bat is Google. Everyone seems to have an inherent bias that considering the prior failures, so too is Google set for the same fate. Yet something feels very different this time around. All in all, Google TV is a huge development for someone like myself-an active investor with a penchant for cutting edge technology-and something that I believe bodes well for future growth of media content distribution.

My Personal Experience with TV in the Living Room

As a user, I was pretty disappointed with the AppleTV from day 1. When first released, it had neither a database of content to buy nor access to YouTube and the device altogether lacked any Internet browsing capabilities. There were some cool features: for the first time I was easily able to bring my personal picture and video collection to my TV and I now had a way to easily play my digital music through the living room surround-sound system without going analog. These were nice perks, but far short of what I was really looking for in an integrated media center.

The AppleTV eventually stopped working (yep it broke…) and I'm still not sure as to exactly why, but rather than fixing it, I decided to pickup a Playstation 3 instead-a video game console with built-in browsing capabilities, and most importantly, a BluRay DVD player. This was a significant step for me. I am not really a video game enthusiast (although I do like Rock Band ) and never in my life had I owned a gaming console (outside of the Nintendo (NTDOY.PK) Gameboy my parents reluctantly caved on letting me share with my sister as a young 'un), but I made the jump. I did this not to play video games, but rather to bring to my living room the Sony ( SNE ) online entertainment store, Internet access to sites like Hulu, and the Netflix ( NFLX ) online library. I now have my own on-demand system. Yet it all feels largely incomplete. The browser is far from seamless in its capabilities and the scalability and customization are greatly lacking. I need more.

Why the Time Is Right Now

More and more media is moving to a content-specific model of distribution meeting the on-demand, "me now" desires of the maturing Generation Y-ers and the tech-savvy Generation X-ers. We see this trend taking hold with all forms of media, whether it be written, audio or video. I wrote briefly about this phenomenon in my take on Netflix and I urge my readers to check out Larry Kramer's interview with Damien regarding the changing media business. Tivo ( TIVO ) completely changed the way in which people watch TV. It wasn't too long ago that we all scheduled our days, evenings and nights around programmed TV times (no one could risk being away from the TV when Seinfeld came on). Granted, I am slightly more tech-inclined than your average person, but I do recognize this desire and hunger in my peers for responsiveness to their demands. Everyone is "super-busy" in their hyper-tech-connected sort of way that they want their content to revolve around them, not the other way around. I know personally, outside of sporting events, I never watch live tv, and pretty much exclusively watch either recorded programs, on demand, or Netflix online media.

With more and more content shifting to the Internet itself, it is now practically possible to altogether forego cable and watch just about anything through some sort of web-based content provider. In the past, outside of the couple extreme erudites I know, everyone had cable. Now, I know plenty of people who rely on the Internet for their viewing pleasure. Baseball fans can watch games on MLB.com, Lost fans can catch the show on Hulu (can't believe the show is over!), and movie-buffs can watch thousands of titles on the Netflix online database. Whereas in the past there was limited content available online, today there is an infinite number of hours of music, movies and television for individuals to consume from a multitude of sources.

Adding fuel to the fire is the recent "applications" phenomenon that has launched the iPhone/iPad to stratospheric success and has taken over the likes of Facebook and Google's Android phone app. These programs lend themselves greatly to a more aggressively integrated living room media center. Companies can now build specific applications for their products and services to work in an accessible and personalized manner for just about anyone. Tech-savvy and novice consumers alike can find features that are personally appealing and the open operating system allows for the development of an endlessly vast supply of such features.

The Nitty Gritty of GoogleTV

Google is launching its TV in conjunction with a cadre of strategic partnerships. Partners will range from actual hardware suppliers (box-makers themselves) to content providers via the accessibility of applications. GoogleTV features the Chrome browser and synchronization with the Android phone operating system, enhancing the overall Google user experience (maybe this could be a great outlet to increasing sales of its growing phone line). The entire infrastructure will be open source so that anyone can program applications for Google (this even stems to an open IP address for remote control access through which a user can program their own remote device). GoogleTV will work with an infrared QWERTY keyboard, that the company hopes will become a centerpiece on living room coffee tables around the world. It was funny watching news anchors speak about this "possibility" as somewhat remote, while typing on my centerpiece living room table laptop. People are there already, this is simply a matter of technology catching up with what we desire.

Why Google Will Succeed Where Apple Did Not

Google and Apple both recognize the demand for an integrated media experience. The iPad plays on this trend with its integration of traditional media into the mobile browsing experience, yet AppleTV has yet to gain traction in the living room. Apple recently announced its own new TV offering; however, in my opinion it is more a device to access Apple's own media distribution via iTunes , rather than an all-out media connectivity device. Apple in its attempt to garner access to each level of the distribution line in media is potentially going to miss out on the bigger picture opportunity.

As an early adopter of the original Apple TV, there were several problems which I think Google adequately tackles. Apple rarely allows for user democracy and opts to close off access to its operating system. It's different with a mobile device, where the point of access is a product unto itself, than it is in the living room where many competing technologies and media forms battle for consumers. The AppleTV itself was created as a device to enhance the existing home entertainment and technology infrastructure - as a device to expand the scope of your computer's capabilities, rather than as stand-alone devices that can function independently of your personal tech infrastructure. In my opinion, this stems from Apple's desire to constantly up-sell their users to a wider variety of their products. Apple was off with both its execution and timing in creating the AppleTV. Google nailed the timing, and it seems like it nailed all the preliminarily important features.

In Conclusion

As always with new technology, we will most likely have to wait for version 2.0 to truly gauge its impact and uptake, but for now GoogleTV looks like it might be a blockbuster. Given the weekend to digest Google's groundbreaking announcement, the stock has reacted rather bullishly (despite a bland tape Monday) and investors seem enthusiastic about the company's jump into the TV space. As an investor and tech enthusiast, I am both happy to be an owner of Google shares and am eagerly awaiting planting a GoogleTV in my home entertainment center.

Disclosure: Long Google

See also Disney's Addition of ESPNW for Women's Sports Is Another Web 2.1 Move to Long Tail on seekingalpha.com



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Technology

Referenced Stocks: AAPL , GOOG , MSFT , NFLX , SNE , TIVO

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