Smart TVs: The Race Is On

Sony, Apple, and other heavyweights have introduced new gear for delivering digital content to your screen, and they have competing visions as well as devices

Are smart TVs ready for prime time? Ask the world's top consumer electronics companies, and the answer is a resounding yes.

No fewer than five companies, including Sony (SNE), Hewlett-Packard (HPQ), Microsoft (MSFT), and Netgear (NTGR), announced new ways of bringing Internet video content to the television at the Consumer Electronics Show in Las Vegas. They join Apple (AAPL), which on Jan. 9 announced details of Apple TV, a set-top box for delivering movies, digital music, and other programming to TV.

While the approaches differ, the announcements all illustrate how far manufacturers have come in melding hardware and software with the aim of letting consumers gain access to video on all available screens—the PC, the TV, and even handheld devices like cell phones—and then move those images from one device to the other at the press of a button.

Eliminating the PC Middleman

But the field is crowding, and there are competing visions aplenty for bridging the gap between the Internet and television. One of the most intriguing comes from startup Sling Media, of all places. The company on Jan. 8 announced SlingCatcher, a device for making Web and PC content viewable on TVs either inside or outside the home. The small portable module, expected to retail for less than $200 later this year, attaches to a television set and offers unrestricted access to the Internet. "We believe you should be able to watch what you want, when you want to," says company co-founder and chief executive officer Blake Krikorian.

Some players, such as Sony, envision eliminating the PC middleman. Flat-panel television models expected later this year will be compatible with the Sony Bravia Internet Video Link module. The book-size unit attaches to the back of the set and, with an Ethernet connection, streams content directly to the TV without the need of a PC. Sony didn't announce the price or say when it would be available.

By controlling the conduit, Sony also holds sway over content. At least initially, content will be limited to programming from Sony Pictures Entertainment, Sony BMG Music, Yahoo! (YHOO), Time Warner's (TWX) AOL, and the Grouper video- and photo-sharing site owned by Sony. "We're shifting content experience from a lean-forward PC exercise to the comfort of the big-screen TV in your living room," says Randy Waynick, senior vice-president of the home products division at Sony Electronics. "Internet video will clearly be the next step in the evolution of high-definition television, giving users more control over the content they view."

The Computer-centric Model

Microsoft and its computer-making partners are, not surprisingly, opting for a more PC-centric approach. HP announced the TouchSmart PC, which uses the new Vista operating system in its all-in-one Media Center combo. At the same time, HP is expanding its MediaSmart lineup of TVs to stream content from the PC through a wired or wireless connection. Microsoft's Bill Gates also announced that later this year Microsoft will expand efforts to deliver movies, broadcast TV, and music to the Xbox 360 video game console (see BusinessWeek.com, 1/8/07, "Gates and Microsoft Open Further Vistas").

Meantime, Netgear is pushing its own set-top box approach with a new digital media adapter. That device adds software from Netgear's recent acquisition of SkipJam, which offers software for home entertainment and home automation.

The trick for all these companies will be convincing consumers that these new visions of Internet TV finally deliver on their promise. There has been scant interest in early approaches, such as Media Center PCs and other set-top boxes. "The market opportunity for smart TVs will not be large in the near term, but we do believe it will grow to a sizable market by the end of the decade," says IDC analyst Bob O'Donnell. "The challenge for TV vendors will be to determine what feature set, what type of interface, and, if possible, what type of applications to offer on their devices—all within an easy-to-use interface."

Analysts say it's still early to determine which if any of the approaches best combines those qualities, but the blockbuster conferences this week demonstrate the race is very much on, and it will be hotly contested.