As I Was Saying

TV War: Microsoft Vs. Apple

9/19/2011 5:36 PM

Silicon Valley has been abuzz for more than a week about two separate approaches to TV.

Microsoft confirmed that it will introduce a TV product before this Christmas shopping season, while rumors about an Apple TV set (not just a Web-accessible set top box) escalated, with most speculation focused on delivery for the 2012 holiday season.

Among many other questions, a fundamental curiosity about these two story threads evolves: Exactly what is television?

For both Microsoft and Apple, the core opportunity is packaging and selling access to video content, including on-demand IP programs and conventional linear shows. It’s not necessarily about TV sets as we now know them.

In Apple’s case, of course, there is the possibility of an actual TV tuner/receiver, certainly achievable for a company that already manufactures (via contractors’ factories) plenty of flat-panel display monitors for its computer business. The necessary video reception components can easily be embedded behind such screens.

For Microsoft, which is fundamentally a software, not a hardware, supplier, building and selling TV sets is far less likely. That’s why the latest Microsoft TV venture focuses on using the company’s Xbox 360 game console as the access device and its poplar Kinect gesture-controlled interface as a navigation tool.

While it’s tantalizing to ponder going into a Best Buy or Wal-Mart store next year for side-by-side comparison shopping of an Apple or Microsoft TV set, that’s unlikely scenario. The current rumor mill is pointing to plenty of differentiating evidence, such as Apple’s recent patent on “no-glasses” 3D and Microsoft’s deal with Jinni for program search and discovery across platforms. Such features will make comparisons even harder at the hardware level. Microsoft’s recent alliance with ESPN3 to showcase college football games exemplifies the kind of deals Microsoft will make to line up popular programming for Xbox delivery.

Apple can build on its massive library of titles sold (rented) through its App Stores. Among the “knowing” details (i.e. guesswork) are suggestions that Apple would aim for the small- and mid-sized TV market (let’s say 20-inch monitors give or take 5 inches), targeted at dorm rooms or kitchens, and thus not competing with Samsung, Sony, Vizio or Panasonic for the main large-screen TV set in the home. Apple’s TV would run a variant of the iOS operating system.

For Microsoft, if it opts to get into the TV monitor business, it could work with Samsung or Panasonic, among others, where it already has relationships based on TV Apps and tablet technology.

On the other hand, skeptics contend that the notoriously low-margin consumer electronics commodity category will not appeal to Apple, despite the obvious embrace it would receive from fan-boys, who cannot resist any device that carries the pomaceous fruit logo.

Fueling Mircosoft’s TV initiative is the strength of its rug-top box: More than 55 million Xbox consoles are in homes around the world, and in less than a year, 10 million Kinect peripherals have flown off shelves.

In today’s fluid environment, with NetFlix and countless other broadband video sources plus the rise of TV Apps now appearing on “smart TV” sets, the looming arrival of Apple and Microsoft could become game changers - especially if their credibility encourages more viewers and Web surfers to cut or trim their cable cords.

What makes this all so fascinating is the competition or collaboration with exiting cable operations. Microsoft has been negotiating with MSOs for years, seeking in this case to let customers access programming they pay for via the Xbox receiver, not just the traditional set-top box. Apple historically disdains cable operations.

To make the upcoming year even more complicated, these Apple and Microsoft adventures into TV will come just as Google - burdened by its own failures to launch Google TV - begins to integrate its Motorola acquisition. It all gives deeper meaning to the concept of a “new TV season.”