Apple TV vs. Google TV: A clear choice for consumers

Now that Apple TVs are showing up in stores (and are being snapped up by customers), and Logitech has set a ship date and price for its Google TV set-top box, consumers will have a clear choice between the companies' fundamentally different approaches to user interaction.

Apple TV takes over the living room screen while you're looking for content, but once you press "play", it gets out of the way, and you watch television as you always have. However, it doesn't interact in any way with your existing cable, satellite or IPTV set-top box, and your existing video signal doesn't pass through the Apple TV box.

Google TV, on the other hand, turns television into a content source for the Internet, and turns your big-screen television into an oversized Internet browser. Your existing video signal passes through the Google TV box. It overlays a search bar and search results on live television. It puts web pages on the television screen, with the live television image as a small "picture-in-picture" overlay.  If you're a Dish Network subscriber, Google TV takes over the electronic program guide functions as well.

The fundamental question for consumers is: Do you want to browse the Internet on your living room television? If you do, Google TV is the way to go. Or, do you want to watch television on your television and simultaneously browse the Internet through a tablet or laptop? If so, Apple TV should be your choice. The "wild card" in all this is the fact that Apple TV runs iOS and could run third-party apps in the future. This would dramatically increase the functionality of Apple TV, although it would still be a separate content source, not a television pass-through device.

Many people believe that Apple's long-term game plan is to make much of the content that's currently available through cable, satellite and IPTV set-top boxes available through Apple TV, thus competing directly with the existing service providers. If that happens, Google TV's ability to pass through video from existing set-top boxes would no longer be an advantage.

As a practical matter, I think that the price difference between Apple TV and Google TV, and Apple TV's inherent ease of use, will be the most important factors driving sales for the holiday shopping season. Apple TV is $99 complete, while Logitech's Revue running Google TV will be $299.99 (Dish Network subscribers can buy it for $179). The Revue comes with an ugly QWERTY keyboard as its remote control; a slightly more elegant optional remote control can be purchased for $129.00, and an HD video camera for webcasting and videoconferencing will cost $149.99. (Sony's new remote control for its Google TV implementation looks like it was designed by the same team that did the Pontiac Aztek.)

My suspicion is that in-store demos of Google TV are going to go "off the rails" as soon as people pick up the keyboard and try to use the TV as a web browser. Apple TV is point-and-click simple, but when consumers realize that they have to type in order to use Google TV, interest is going to drop very quickly. I could be wrong, but I think that Apple TV will win the battle, at least this holiday season.

Apple introduce its own HDTV? I think not

An analyst report by Piper Jaffray's Gene Munster is getting some traction. In it, he predicts that Apple will release an Internet-enabled $2,000 HDTV in the next two to four years. I don't buy it, at least not in the way that Munster foresees. Here's why:

• Companies have been building HTPCs for years, and no one has made any significant headway in the market.
• Apple TV has been on the market for several years, and it's never gotten past the "hobby" stage for Apple.
• HDTVs are almost commodity products, and it's going to be extremely difficult for Apple to make the kind of hardware margins that it targets and be price-competitive.

I believe that Apple's best opportunities are to rethink Apple TV and open it to non-Apple content, and to add more video to the iTunes store and make it available on every device that Apple sells. Whether that means that Apple and the iTunes store will replace cable, satellite and IPTV operators remains to be seen. The business challenges are far more daunting than the technical ones.

If the FCC mandates that cable operators switch to software-defined set-top boxes and drop CableCARD, I can easily see a next-generation Apple TV that does everything that today's set-top boxes and DVRs do, plus internet connectivity to the iTunes store and to third-party content providers. I don't believe that Apple will get into the HDTV display market.

TiVo tanks, Apple breaks third-party apps

Earlier this week, TV By the Numbers reported that TiVo lost 163,000 subscribers in October, and the company has lost subscribers almost every month this year. In its most recent quarter, TiVo only sold an average of less than 500 DVRs a day. The company would have lost money in the quarter had it not received a one-time payment of $105 million from Echostar for patent violations. It's pretty clear that TiVo's situation is getting dire, and the company is not going to survive in the standalone PVR business for much longer.

At about the same time, Blockbuster got into the set-top box business, as I've written about earlier. Also, Apple released a new version of software for its AppleTV STB, which broke third-party software running on those devices, including Boxee, media center software for Linux and OSX that supports Hulu, CBS, Comedy Central, CNN and many other Internet media sites. Boxee was back up and running on the AppleTV a day later.

Is there really a market for third-party set-top boxes? By and large, the answer is "no," although the Roku Netflix player seems to be selling well. What I'd really like to see is a set-top box that's open and that supports multiple services. That rules out Apple and Vudu. You shouldn't have to pay a monthly subscriber fee to use the box, so that rules out TiVo, Microsoft's Xbox 360 and, at least for now, Roku. Blockbuster's new box is still a question mark--there's no monthly fee, and the box, built by 2Wire, runs Linux, but it's unclear if Blockbuster will allow Boxee and similar applications to run on it.

In my opinion, it would be a brilliant move if Blockbuster let Boxee, as well as others, run their software on its box without a long approval process or the fear that the third-party applications would be deliberately broken by Blockbuster. In one step, Blockbuster's offering would move from a me-too product to a market leader.

Experience has proven that consumers simply don't want multiple set-top boxes. Given the choice between a cable operator-provided PVR and a TiVo, they've chosen the cable operators' offerings in droves. This market is dead unless the players start seriously rethinking their strategies to adapt to consumer needs.