Google and Apple TV, RIM and Microsoft Phones

It’s the last workday of 2011 and everyone seems to be doing a retrospective, but I’m not going to do that!  What’s the point of blogging if you rake up the past anyway?

There are more stories today about both Apple’s and Google’s possible plans in the TV space.  One of the popular ones (for both vendors) is that they’ll include broadcast TV services and also personalization, meaning channel-by-channel subscription.  I have serious doubts that either of these is true, and I think the fact that they’re likely false makes the notion of a serious TV play harder for either company to justify.

Without broadcast TV channels, anybody’s “TV” is just super-Netflix at best, and the problem is that broadcast IPTV is a black hole.  Look at U-verse; the Microsoft/AT&T/Alcatel thing.  It takes special infrastructure that has a high complexity and cost, not just a box that’s stuck at the end of a broadband connection.  Without special features in the access network, the streaming process will create hiccups even in decent broadband areas because of increased traffic and congestion.  Operators have no incentive to fix these; they’re not part of the revenue stream.  With lower-bandwidth connections, there will be a lot of hiccups, and what happens to Apple or Google (or their dealers) if somebody moves to a place where Internet is slower or poorer?  Nothing like built-in customer support problems to create negative incentives.

The point is that IPTV is more than the TV part, it’s a whole system of content management, QoE management, and delivery optimization and neither Google nor Apple control anything like enough of the pieces to make this sort of thing work.  Thus, I think an attempt by either to get into the broadcast TV space would be a major technical/QoE black eye for them.

And then there’s the question of whether anyone would even license the material to them.  There is no legal obligation for a content owner to permit OTT streaming of their video, as we all know.  Sure, some of the off-brand networks might go along with Apple and Google, but here again the rumor mill sticks a wrench in the spokes.  These networks would be the very ones hurt by any trend toward a la carte channel selection.  That was the point that was made when the FCC was pushing the notion that channelized TV operators of all types should allow consumers to select a la carte.  Thus, the two rumors don’t even go together.

The truth here, I think, is a lot more pedestrian.  It’s becoming clear that streaming video fits into personal viewing primarily to fill gaps in traditional programming.  Everyone has such gaps, and given the nature of network broadcast TV (seek the lowest common denominator), there are likely to be more gaps and particularly so in key higher-income demographics like young professionals.  There’s a good opportunity there, and that’s a demographic that both Apple and Google want.  I think both companies want to integrate the viewing experience, to manage how content is presented.  They’d really like to be in control of the “Guides” and to be able to use subscriber behavior and history to suggest things to fill the empty spaces.

There are also more stories today about phones and tablets and Microsoft and RIM.  It’s pretty obvious that RIM has left the path of wisdom and is now going to have a very hard time getting back.  The question is whether they get smart and accept the notion of M&A.  With whom?  My suggestion is Microsoft.  Here’s a phone with a brand that can’t get OS right.  Here’s an OS that can’t get a phone right.  A match made in heaven.  OK, it throws Nokia under the bus, but they’ve been down there for a couple years anyway.  I think the only way Microsoft can save WP7 is by buying a big handset brand, and who else is out there?  I think the only way RIM can avoid vanishing to a point is to sell itself to somebody who needs brand more than anything, and who else is out there?

The truth is that the phone market is ripe for a major change anyway.  We’re talking about “superphones” now, smartphones with two or three times the screen resolution.  For what?  Unless you look at your screen through a jeweler’s loupe it’s going to be hard to tell the difference.  The point is that we’re into the gilding-the-lily phase here, which means that the competitive focus is going to shift.  I think it’s going to shift out of the phone and into the cloud, which is something both Apple and Google are preparing for.  Microsoft could be a player in that kind of shift if it had a good handset strategy, and Nokia is never going to give it one because Nokia and Microsoft don’t want the same thing, really.  Nokia needs phones to be strong and expensive; Microsoft needs phones to be a part of a consumer ecosystem that includes PCs and the cloud.

Happy New Year!

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