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CES: How Much Extra Will the New Googlefied TVs Cost?

“If at first you don’t succeed, try, try again. Then quit. There’s no use being a damn fool about it.” — W.C. Fields

Google TV is back: It’s got a new look, new partners (LG, chip-makers Marvell and MediaTek) and the promise of 96 cable-like “channels” on YouTube this year (see CES: LG, Samsung, Sony And Vizio On Board With Google TV 2.0).

But the big question with version 2.0 is the same as with 1.0: What’s the price premium for the hardware needed to power Google TV?

Sony’s initial Google TV products were listed at retail for $200 to $400 more than non-Googlefied versions. Logitech’s Revue set-top was $300 (before falling to $99). None of them sold well; badly burned Logitech has given up on Google TV.

Pricing info isn’t available yet. LG says in 2012 it will debut two Google TV models — both of which will be 3D-enabled, driving up price points even more.

Google has more money than God (and more cash on hand than Apple). But Google won’t make the bad business decision to fully subsidize smart TVs simply to get Google TV seeded in the market.

Which actually is one of the beauties of its model: Google’s partners, not Google, shoulder the risk. You have to assume Google TV 2.0 component costs are lower, thanks in part to ARM-based processors, after the 1.0 debacle.

Look, CE manufacturers are pack animals: witness the so-far disappointing sales of 3DTVs and the wave of iPad copycats. They don’t want to be left out in the cold, if Google TV happens to catch fire. (Note that LG made a point of saying it will “continue to advance its own Smart TV platform based on NetCast using open web technology such as Webkit browser and Linux.”)

The TV makers are looking for something — anything — to help them move higher-margin models, especially after a horrible 2011 when retail prices plunged (see HDTV Prices Drop To Record Lows: Analyst).

But while Net-connected TVs have relatively sold well, it’s not clear how frequently people actually use the features. Only 55% of households with “smart TVs” have even connected them to the Internet, according to a Parks & Associates study in November 2011.

That leads us to Roku, which may have a more successful smart-TV approach. Instead of baking the smarts into the TV’s guts, Roku has devised a USB-sized stick that plugs into an HDMI port. Voilà! Instant Netflix, HBO Go, Amazon Instant Video, Hulu Plus, Pandora, etc. — for as little as $50 (see Roku Plugs Set-Top-On-A-Stick Into TVs).

Meanwhile, there’s a theory that Internet-enabled TVs will lead to rampant piracy (see this post by BTIG’s Rich Greenfield), posing a growing threat to the “TV ecosystem.” But piracy is not a business model, and I don’t see sports nuts rushing out to buy a more-expensive Google TV just to try to get a crappy, spam-riddled feed of ESPN for free.

If access to pirated content is the top selling feature of a Google TV, the marketing challenge for the “smart TV” guys is even bigger than I’ve suggested.


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