By Paul Semenza – Senior Vice President, Analyst Services, DisplaySearch

The launch of Google TV was an impressive event, with Google CEO Eric Schmitt joined by Sony CEO Howard Stringer, as well as the CEOs of Intel, Logitech, Best Buy, Dish Networks and Adobe. There is much speculation about the potential growth of the Android platform, and the new battle between the Google camp and Apple. But given its history in the TV business and its importance to the company, Sony may have more riding on this venture than any of the other partners.

Sony’s struggles to maintain TV leadership in the post-Trinitron era have been well documented. Last year, it gave up the #2 spot in LCD TV sales to LG, and it has struggled with profitability in its TV business. Recently, the company has been reorganizing, including a big move towards outsourcing, which will certainly improve cost structure. But there have been two obstacles to differentiating itself from Samsung and LG:

• The lack of new technology: Sony has had to partner with rivals Samsung and Sharp to gain access to TFT LCD manufacturing and has moved away from OLED TV.
• The long-standing difficulties in leveraging its strong positions in movies, games, and other content, as well as game consoles, BD players, and TV sets in a coherent way

Sony has clearly staked a claim in the 3D movement.

TV brands are operating in an environment where the emphasis is shifting from content to access to content. In this world, the ability to switch seamlessly between traditional TV channels, downloaded content, web-based content, and applications or user-generated content could be a differentiating factor for TV makers. This makes software more important for TV makers, as they must have a way to stay current without reinventing all the software and developing it in house; set makers will have to work on an open platform and be able to move at internet speed. It is not likely that the cost structures or software capabilities of set makers will allow this.

It is perhaps the access to the Android platform that is most crucial to Sony in this venture. The company has not been able to develop a compelling platform for connectivity and access to content (actually, no TV maker has) so gaining access to Google’s software development capabilities and attaching its name to the increasingly popular—and open—Android platform are likely to be valuable.

Of course, it is not clear if this will be a winning combination: Google’s rival Yahoo has a head start, Vudu and Netflix are working with hardware makers, and there are expectations that Apple will remedy its lackluster first offering. Also, Intel has been laboring to get its chips accepted in the TV market without much success, due in part to power consumption and cost. Finally, in order to be really successful, this platform will have to be available beyond Best Buy, and yes, from brands other than Sony. So the question is whether this will be a true head start for Sony and if so, how it takes advantage of it.

For now, this venture seems to be focused on the US market. Sony is a major presence throughout the electronics, gaming and entertainment sectors, and unlike Samsung, has not developed its own ecosystem. With Sony Electronics’ CEO keynoting the SID DisplaySearch Business Conference next week, we are looking forward to learning more.