Apparently Google is having trouble getting TV content providers and distributors on board with Google TV. No surprise there. Traditional cable companies and other players have little incentive to give up control to Google, whom they view more as a competitor than a partner.
Android was accepted by incumbents precisely because the carriers and handset manufacturers were afraid of Apple’s momentum. Motorola, Samsung, and LG needed to figure out how they were going to respond to the iPhone. Google offered their Android OS for free and offered ad-split revenue to carriers and the deal was done. But it was a deal with the devil because the Android handset manufacturers as a group are not making much money. Apple took their profits.
What Google needs right now is for Apple (or someone else) to innovate in TV. Then, maybe, the incumbents will be receptive to Google’s advances. Apple is working on such innovation with their rumored new iTV box, which will provide an application platform that will likely run existing iOS apps. Nevertheless, as Tim Cook has said, Apple believes all these efforts might be marginal until the technology is integrated into the TV set itself, something he claims Apple does not want to do (until the day they do it).
Traditional disruption, described in the Innovator’s Dilemma, is about a cheaper technology sneaking up on incumbent players who are focused on serving their best customers – customers who find the performance of the cheaper new technology to be unacceptable. As time progresses, the new technology matures to the point where it performs acceptably for the mass market, and the market moves to the disrupter.
TV is ripe to be disrupted. It’s expensive for consumers. But you have to remember that you can’t make TV better. According to Nielsen, Americans already watch more than 35 hours per week of it. Watching HD TV over FIOS with a Tivo on a 52 inch Samsung LCD TV is near nirvana. You can only make TV cheaper.
It’s not likely that Apple will disrupt TV by making it cheaper. As the premium provider, they nearly always focus on making things better, not cheaper. Apple did not disrupt cell phones in the traditional sense by making them cheaper. What they did is introduce such a compelling innovation from a user experience standpoint that the least price sensitive, most profitable part of the market moved to the new technology. And then Google’s Android offered a low-cost good-enough alternative to feature phones that offered similar benefits. That’s par for the course in the technology world. What is unique about the iPhone story is just how fast the market is transitioning to smart phones and how rapidly all the profits moved to the early leader in that technology.
Long story short, Google is not going to have much luck with Google TV unless they can offer TV for less for consumers. I think Boxee has the better approach there. That’s traditional disruption. Boxee is a mediocre experience at best today compared to FIOS attached to a Tivo with an HDTV, but it’s free.
Cablevision’s best customers are not asking for low-def TV with fewer channels, constantly shifting line-ups and mediocre picture quality. And even if Cablevision sees the Boxee threat, they don’t want to give up their rich subscription revenue business to answer it. But each year Boxee will get better. And if Joe sixpack walks into a Best Buy and is told that the Boxee integrated Vizio TV in the corner does not require a cable subscription and will save him $1200/year, he will likely take the offer even if that TV offers a slightly worse experience. And that will be the end of the TV franchise as we know it.