Battle Royale for the Living Room: Google v. Microsoft Edition
A few days after the Googletv announcement and the press is still looking at this is a battle of Apple v. Google. It is certainly a lot of fun to watch the snipes go back and forth between the two companies but their battle is WWE - only entertainment. The real battle for the living room is between Microsoft and Google and Apple does not even have a horse in the race. Despite their clear market dominance on the set top, Microsoft continues to maintain a stealth position relative to mainstream press.
I recently spoke with a senior executive at Microsoft - real Microsoft not the game guys - and he was talking about their competition. He said they accept losing out to Apple because Apple makes cool pieces of hardware and that is just not what Microsoft does. However, those Google guys are a different story. Google is a bunch of engineers with the same drive, the same intellect and the same strategic goal of world domination. They are scary. The guy was proven right today when Google announced Googletv and jumped into the "who can be better cable than cable battle." Sure the video looks like a Simpsons parody of a real product, but Google is throwing down the gauntlet and challenging what until today, was Microsoft's clear path for control of the living room.
Googletv appears to have a very slick interface and perhaps even more accessible than MIcrosoft's fantastic Live interface. It is the kind of thing even a mom can figure out. But the video ignores little things like DVRs, Xbox and PlayStation. - and this is where Google falls down. Google assumes the market thinks like them and we will all dump what we have for something incrementally better. It is easy to do when you are moving from one search engine to another, hard when you fighting dustbunnies behind the entertainment center while you look for an extra socket.
Google thought consumers wanted to be able to sit at their desk and order a a cool phone direct from Google. They didn't, and the program was dropped after a few months. Google now believes consumers are unhappy with their existing set top boxes and will buy a new one to get pretty much the same service as they have today. When in reality, people just don't like to buy extra boxes to plug into their televisions without a good reason. Xbox and Playstation sell for the games. Cable boxes are rented to get more channels. Even TiVo is a pretty hard sell and has not achieved game console level success. The only set top device to achieve game console success is a game console. Googletv has partners who are building them into televisions and offer the convenient option of buying another box to plug into that extra HDMI port you don't have on your TV. Kind of the same strategy as 3DO, Phillips CDI, TiVo and others who licensed technology to hardware partners over the years and have not been able to generate the numbers achieved by dedicated platforms. While they fight to change consumer behavior, they are playing catch up to Microsoft's 40 million plus installed boxes and however many DVR's and cable boxes with painfully similar functionality already out there. There is no reason to anticipate anything other than a slow install ramp while Microsoft continues to add features, content and easier interface through Natal - you didn't really think the thing was for games did you?
It would be really neat to see a competition heat up between Microsoft and Google, distracting them from Sony, and allowing Sony to take over games while the battle ensues for set top box supremacy. Unfortunately, Googletv will look more like Nexus One.