Apple and Google just kicked off the first round of their battle for the living room. Based on what we’ve seen so far, Apple is in the lead.
It’s still early, and this could change, but it looks like Apple is making an all-around smarter bet than Google.
To recap what the two companies are doing:
- Google is introducing a product called “Google TV,” which is initially available as part of a $300 set-top box from Logitech, or as part of a high-end line of TV sets from Sony. It’s trying to become the default way you look for TV shows to watch, hooking up between your cable box and your TV. It’ll let you search the TV listings, web video sites, and will eventually have an App Store.
- Apple just released the second version of its “Apple TV” gadget, which costs $100, or two-thirds less than the first Google TV set-top box. It’s basically a DVD player for the 21st Century, including movie and TV rentals from iTunes, playback for other iTunes videos, and Netflix movie streaming. And, starting next month, you’ll be able to wirelessly beam video and audio to it from an iPad, iPhone, or iPod touch. Apple hasn’t announced plans for an App Store on the Apple TV yet, but we assume it’ll have one in the next year or so. (Plus, Apple TV hackers may create an unofficial App Store much sooner.)
Analyst Michael Gartenberg has a nice way of summing up the difference between these two products:
- Google is going after “input one” on your TV — the first input where your cable box is plugged in, which is a really big, really risky bet. Most people don’t mess with input one. How often do you switch cable or satellite providers? Or set-top boxes? Rarely, if ever.
- Apple, meanwhile, is going after “input two,” where your DVD player or video game machine is probably plugged in. In most households, that’s likely to be an easier entry point — mentally easier to unplug, easier to experiment with.
That, combined with the significantly lower initial cost for Apple TV versus the Google TV gadgets, is why we think that Apple will have higher adoption this holiday season than Google TV.
No one really needs either of these systems yet. And most people have no idea that they’d even want the web on their TV sets — especially to the extent Google is building it in.
Because of the simpler message and lower price tag — $99 is within impulse-purchase range, while $300 is not — Apple should at least have an easier time convincing people to give Apple TV a try than Google will for Google TV. And that’s how Apple has won this early first round. (Yes, there are other players, such as Roku, Microsoft’s Xbox, Sony’s PS3, etc. But this seems to be shaping up to be a war between Google and Apple.)
Here’s where Google could do well, though, over several years: If it can spray its software everywhere through wide distribution, the way it has done with Android in the mobile industry.
If Google can get every TV manufacturer, some set-top box makers, cable companies, etc. to use Google TV as the basis for their devices, then people will get Google TV in their homes without even realising it. Apple is unlikely to licence the Apple TV software to other companies, and may or may not ever come out with its own TV sets. But if Google can get its software built-in everywhere, it could gobble up market share more quickly.
Here’s the tricky part. For now, the first batch of Sony TVs with Google TV built-in are supposedly going to be expensive, so this will be a slow process. We assume this is because the Intel chip required to run Google TV is more expensive than the guts that go into a budget-grade TV. Eventually, this cost may go down, so even budget TVs could come with Google TV pre-installed.
But for now, it looks like people are going to have to consciously choose Google TV — and pay hundreds of dollars extra for it — to get it. And that’s going to constrain adoption.
That tips this round in Apple’s favour. But we’re eagerly awaiting the next one.
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