(Bloomberg) Samsung Electronics Co. (005930), LG Electronics Inc. (066570) and Toshiba Corp. (6502), anticipating a challenge from Apple Inc. (AAPL), are answering with TVs that respond to voice commands and let viewers move easily between Netflix and ESPN.
New models from LG and Panasonic Corp. (6752) sport an onscreen display inspired by smartphones and tablets. The old guides are replaced by a home screen with floating pictures of shows from cable or the Web, ranked by past viewing. Four Samsung models will respond to voice commands or hand gestures, like Apple's Siri or Microsoft Corp. (MSFT)'s Xbox Kinect game console.
"One of the key things is really to bring the 'wow' experience back to the TV," said Joe Stinziano, a senior vice president for Suwon, South Korea-based Samsung. "There's a lot of technology in the background that makes the experience much more enjoyable."
The focus on user experience, in evidence at the International Consumer Electronics Show this week in Las Vegas, is driven in part by the threat of a TV product from Apple, which co-founder Steve Jobs was developing before his death. Apple's iPhone redefined the smartphone and crushed rival brands. Its iPad created the tablet market, denting laptop sales. Incumbent TV makers don't want to be caught unprepared.
"The mythical Apple TV that's been widely talked about but never seems to appear is still on the back of everybody's minds," said Tim Alessi, director of new product development for LG Electronics. "They're probably the undisputed experts in simple user interfaces."
At stake is a global television market projected to reach $200 billion by 2018, according to a MarketResearch.com. TV makers are working to improve the look and feel of a viewer's experience as Apple, Intel Corp. (INTC), Microsoft and others eye entry. Manufacturers also face pressure from low-cost Chinese producers that have driven down prices and squeezed profits.
TV makers have struggled to convince shoppers to upgrade based solely on premium features such as 3-D viewing and Internet connections. With the focus on design and usability, they're switching tactics ahead of an important upgrade cycle expected to begin next year with the seven-year anniversary of when mainstream consumers accepted flat-screen sets in their living rooms.
New Samsung TVs offer technology that, with two clicks of the remote, lets users stream content from the big screen to its Galaxy tablets and smartphones. Viewers can watch separate shows on the two screens.
LG is adding a microphone to its remote control and software on the television called Voice Mate that searches for show names, directors and actors among cable and satellite programming, on-demand services and external devices such as Blu-ray players.
Better interaction with viewers, including offering show recommendations, is a priority for manufacturers, according to Stephen White, president of music and video content company Gracenote Inc., which delivers such services to TV makers.
For several years, so-called smart TVs have been able to connect to the Internet-based services as Spotify Ltd. music and Netflix Inc. (NFLX) movie streaming. Yet only 18 percent of consumers access online content daily from their sets, according to 2012 global survey by researcher NPD DisplaySearch.
"The interfaces are still fairly challenging," said Kumu Puri, an Accenture Plc (ACN) partner and senior executive in charge of the consulting firm's consumer electronics business. "There is definitely a market for services but it's going to take some more work on the part of the manufacturers in the types of applications and interfaces they're delivering."
Companies are under the gun to fix the shortcomings now. About 33 percent of consumers plan to purchase a new HDTV this year, up from 20 percent a year earlier, according to a September survey by Dublin-based Accenture of 11,000 consumers in 11 countries.
The entry of Cupertino, California-based Apple would increase the pressure. Before his death in October 2011, Jobs told a biographer he had solved the question of how to make a simple TV product. The company has been seeking access to content through agreements with media companies or cable providers, people familiar with its plans said in September. Negotiations with film and TV studios have been a sticking point. Apple has declined to discuss details, other than to acknowledge it's working on a TV product.
"Whether Apple will jump into the TV market remains a mystery," said David Hsieh, a vice president for greater China at researcher DisplaySearch. With profit margins so tight, the company will have to find ways to command a price premium from consumers, either through design or with a package that includes content, he said.
Getting viewers online also offers electronics makers the potential for new revenue. A home page controlled by the manufacturer's software offers opportunities for advertising revenue. A viewer who watches a car show, for instance, might see a Lexus ad, while U.S. fans of "Downton Abbey" might see travel promotions to Europe.
A separate plus is developing brand loyalty through a so- called connected home filled with devices that can interact with each other. By 2017, almost 90 million homes worldwide will have devices, estimates ABI Research.
Manufacturers are adding a half-dozen wireless technologies in everything from tablets to dishwashers, envisioning the television as the central control point, according to Weili Dai, co-founder of wireless chip provider Marvell Technology Group Ltd. (MRVL)
As manufacturers re-envision how consumers interact with their sets, the changes will benefit makers who create experiences that resonate best, said Jeff Barney, vice president and general manager of Toshiba America, the U.S. unit of Tokyo- based Toshiba.
"As consumers find more useful things about the TV, there's more opportunities for us to make money," Barney said. "The first thing we've got to do, though, is create a great experience."