Sunday, September 02, 2012

(BN) LG Joins Philips for Web TV System as Apple Threat Looms

Aug. 31 (Bloomberg) -- Apple Inc. and Google Inc.'s rise in the smartphone market has pushed Nokia Oyj and Research In Motion Ltd. to the brink. Now, television makers are scrambling to make sure the same won't happen to them.

At the IFA consumer-electronics fair in Berlin this week, manufacturers including Toshiba Corp., LG Electronics Inc. and Royal Philips Electronics NV are banding together to develop a common system that allows users to listen to music, watch videos and play games via the Internet on TV sets.

Television makers are wagering that mobile-phone users who are hooked to consuming content will want the same access -- and on bigger screens -- when they return home. For manufacturers to hold back Apple and Google, both making steps to take a slice of the TV market, they have to develop a joint operating system because consumers won't accept more than a few competing platforms, said Klaus Boehm, the head of media practice at Deloitte LLP in Dusseldorf, Germany.

"All market participants have to consider this as part of their strategy, and if they make the wrong call they may be out of the market in a few years' time," he said. Apple and Google "can set de facto standards against the consensus of the market and assert themselves because of their market power and unique selling points."

Apple TV

Apple is in talks with at least one of the largest U.S. cable companies about teaming up on a product to carry live television and other content, a person with knowledge of the plans said this month. An Apple TV could sell about 2 million units in the quarter ending in December, according to Peter Misek, an analyst at Jefferies & Co.

Members of the Smart TV Alliance want to make sure that application developers can create offerings that run on different TV sets and they expect additional members by the end of the year, said Olivier van Wynendaele, a product and business development manager for smart TVs at Toshiba.

"There are many platforms on the market, and that creates a lot of friction," he said in an interview. "Everybody is trying to take a position in that market, and with players like Apple or Google, there is the threat of fragmenting the market, so it's important to work on a common platform."

Philips rose 0.6 percent to 18.20 euros at 9:26 a.m. in Amsterdam. Apple fell 1 percent to the equivalent of $659.13 in German trading, while Google dropped 0.5 percent to the equivalent of $680.09.

Sony Bravia

Some manufacturers have developed their own systems.

Sony Corp.'s Bravia TV sets can stream films and songs through the Sony Entertainment Network, which also connects with the company's Playstation console and Xperia phones.

Panasonic Corp. is showing at the IFA fair how its Viera system allows content to be moved between the TV and tablet computers. LG's operating system enables viewers to obtain movies from video-streaming services Netflix Inc. and Inc.'s Lovefilm.

Samsung Electronics Co., the largest manufacturer of smart TVs with more than 30 percent market share globally, said alliances may be currently more appropriate for its smaller competitors.

"Alliances may be possible but we're not at that stage yet," Hyun-suk Kim, the head of Samsung's TV business, said in an interview. "Everybody is using their own platform right now, but the small companies find it very difficult to get content and services. Having a unified platform would be very helpful for the industry but I'm not sure it's the right time" for Samsung.

Superior Design

In the phone business, Apple has shown that it can enter and dominate a new market with its easy-to-use products and superior design.

Nokia, the former leader in the mobile-phone industry, and BlackBerry maker Research In Motion are struggling to win back users lost to Apple's iPhone and devices that run on Google's Android platform.

Teaming up with Google, whose Android software became the biggest smartphones system, might also be an option for some TV manufacturers to counter Apple's threat.

Common Platform

Sony integrates Google TV into some TV sets in North America, while in Europe it will deliver the service through a set-top box only, said Stephane Curtelin, a TV marketing executive for the Japanese company.

"There are a lot of advantages for TV manufacturers going down that route and abandoning their own systems," Informa analyst Andrew Ladbrook said in an interview. "If Google TV is coming on, essentially just Android on TV, then there can be lots of advantages to having one common operating system across the platform."

So far, Google TV set-top boxes and high definition TVs, produced in partnership with Sony and LG, have received lackluster reviews and an even cooler reception from customers.

IFA, Europe's largest consumer-electronics fair, opens to the public today. In Germany alone, flat-plan TVs will make up 49 percent of the projected 12.9 billion-euro ($16 billion) consumer-electronics sales this year, well ahead of digital cameras, game consoles and disc players, according to the Bitkom industry group.

'Beyond Confines'

The size of the market is also attracting mobile-phone operators which smell a second chance after losing out to Apple and Google in selling apps to smartphone users.

Deutsche Telekom AG is showing in Berlin how it will let customers access its Internet-based Entertain TV offering via mobile devices. The phone company is talking to hardware and software makers on how to make different systems work together, said the company's German chief Niek Jan van Damme.

"For a time, people were not able to go beyond the confines of their ecosystems," he said. "I don't think customers will tolerate that in the future. I'm happy we were off to an early start, that's always advantageous, but we'd also welcome cooperation with others."

Another strategy for manufacturers could be to stay out of the content business altogether and focus on the hardware.

"Most of the manufacturers are not in the content distribution business, they have to create the store environments in a manner that keeps the consumer in the same window," said Matt Milne, head of sales and marketing for Rovi Corp., a provider of digital entertainment guides, which counts all the major TV manufacturers among its customers.

"They all entered the world expecting to get the additional revenue and that's not really materialized at least never in the way that Apple have done with the iTunes store and the iPhone," said Informa's Ladbrook. "Only Apple and Sony have their own content. They're the only ones that can make money. The rest are acting as gatekeepers."

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