May 21st, 2010


Google, partners hoping people want their Web TV

SAN FRANCISCO (AP) -- Google Inc. believes it has come up with the technology to unite Web surfing with channel surfing on televisions.

To reach the long-elusive goal of turning TV sets into Internet gateways, Google has partnered with Sony Corp., Intel Corp. and Logitech International. They unveiled their much-anticipated plan for a "smart" TV on Thursday, and Intel CEO Paul Otellini predicted the effort will be "the biggest improvement to television since color."

"Our goal is to make the same impact on television as the smart phone has had on the mobile phone market," said Rishi Chandra, the Google product manager who is overseeing the smart TV project.

The TVs are expected to go on sale this fall in U.S. Best Buy stores, with prices to be announced later in the year. Sales will expand to other countries next year.

Other companies have tried to promote Internet-connected TVs with little success during the past decade.

"I have seen this movie before," Gartner Inc. analyst Ray Valdes said of Google's ambitious plans. "They are going down a road littered with failed initiatives like this."

But Google and its partners believe they have developed a system that will make Internet TV simpler and more appealing. They are also counting on various websites to build news applications tailored to run on the Internet TV; they believe that would persuade more couch potatoes to begin interacting with their sets instead of just watching them.

Many households already have been connecting their TVs to the Internet, mostly to watch video through set-top boxes, video game consoles and Blu-ray players. Web-connected TVs are expected to account for about 19 percent of the U.S. sales of flat-panel models this year, with the share projected to rise to 46 percent in 2013, according to ABI Research.

Three of Google's biggest rivals - Apple Inc., Microsoft Corp. and Yahoo Inc. - also have been trying to bring more Internet video and services to televisions.

Apple CEO Steve Jobs once described his company's device for tethering TVs to the Internet as a "hobby." Forrester Research analyst James McQuivey expects Apple to become much more serious about its efforts now that Google is expanding into TV.

"The whole game for Google is to become the (operating system) for the living room and make sure Apple doesn't," McQuivey said.

Google, which made the bulk of its nearly $24 billion in revenue last year from Internet ads displayed on computer screens, wants to turn televisions into giant monitors for Web surfing so it can make even more money. The company estimates that television accounts for $70 billion in annual advertising in the U.S. alone.

Google has been trying to sell ads for regular television programming for the past three years, but analysts say that has yielded paltry dividends so far.

Thursday's demonstration of the Internet TV technology didn't go smoothly at a Google conference for about 5,000 software programmers.

So many people in the audience were using the conference's wireless access network that Google ran into repeated problems showing how its technology is supposed to toggle seamlessly between the Web and television programming. Google finally had to plead with the attendees to disconnect their smart phones from the network.

"Perhaps that was an omen of things to come," Valdes said.

Once it got enough bandwidth, Google was able to conduct a series of Internet searches in a drop-down box that appears at the top of television programs. The search results pointed to Internet videos and other content related to the television program on the screen.

A telecast of a sporting event can be shrunk into a small "picture-in-picture" box so a viewer can look at statistics or other material about the game on TV.

Viewers will also be able to make search requests by speaking into a remote that runs on Google's Android operating system.

And of course, users could simply use the entire screen for surfing.

Google CEO Eric Schmidt raved about the potential of the Internet TVs, although he acknowledged it might be difficult for some consumers to grasp at first. That's one reason he said Google decided to team up with Best Buy, which offers a "geek squad" to deal with complex technology.

"You have to actually see (the Internet TV) to get excited about it," Schmidt said after Thursday's preview.

Consumers who already have splurged on flat-panel TVs will be able to plug into the new technology by buying a set-top box made by Logitech or a Blu-ray player from Sony. Both devices will contain the same software and microprocessor as the new TV sets.

Sony will make the TVs, giving it a new product that could stand out from other flat-panel sets on the market. It will use microprocessors from Intel, which is hoping to reduce its dependence on personal computers; the Atom chip design that will serve as the brains of the smart TVs so far has mostly been used in inexpensive, lightweight laptops known as netbooks.

Google will provide the software, including Android and the company's Chrome Web browser. Logitech will supply a special remote control and wireless keyboard.

Why Google TV Is Now The Most Important Thing In Television

Today, Google officially announced its latest product, Google TV.
It's a platform, both hardware (as a set top box) and software, that uses a combination of technologies, including Android, Chrome, and an Intel chipset plus Internet connectivity to create a truly amazing product.
Click here to take a photo tour of Google TV →
We think it's going to change the way people watch TV completely. No longer will people crowd around a desktop computer in order to watch videos on Hulu or YouTube. Gone are the days of hooking up your television to your laptop to watch online content. Google has changed everything.

Google TV hooks up to your set top box via HDMI and has an interface similar to something between Windows Media Center and Android OS. Through a search bar, you can bring up various TV channels, find related content on sites like Hulu and Amazon and so much more.

See, Google TV supports Adobe Flash, meaning if you can view it on the web, you can view it on Google TV.

Watching a Football game on TV and want to check your fantasy stats right then and there? You can throw the game into picture-in-picture mode and bring up your Yahoo! Sports account in a few clicks of a wireless keyboard and mouse.

Love movies? You can now watch all your favorite video websites easily on your TV and can use Netflix as well.

But it gets even more innovative. Your Android phone is now a remote. You can speak commands to your TV like "Good Morning America" and the appropriate show will turn on instantly. If you hate fighting over the TV remote, just use two Android phones. Problem solved.

Speaking of Android, a lot of existing Android apps in the Marketplace will work on Google TV. No porting required. It's a developer's dream come true.

And really, it's up to developers to make this happen. Google is open sourcing Google TV in 2011 and when that happens, we should see a flurry of new products and services integrate with the Google TV movement.

Google has also partnered with key companies to make this revolutionary movement become a reality. The Google TV set top box is powered by an Intel Atom processor, Logitech will be producing input devices and a set top box as well, and Sony will be introducing a completely new line of TVs designed with Google TV in mind.

And who will help sell those products? Best Buy (BBY) has partnered with the aforementioned companies, which is very important for everyone involved. Google TV and its associated hardware will hit shelves in Fall of 2010 - right in time for the holiday shopping season which Best Buy CEO Brian Dunn says is incredibly important to making this successful.

Finally, Dish Network's (DISH) partnership will help bring Google TV into existing set top boxes for those who have satellite television. Integration is key. The less devices needed for a killer user experience, the better.

From our point of view, it's clear that Google has an incredible next-generation product on their hands. The next few years will see if consumers are willing to adopt it into their lives.

As for companies like Apple (AAPL) and TiVo (TIVO), they better wake up. The Apple TV has been a lackluster affair since its inception and rather than trying to compete with Google, we could see Apple making amends with Google and trying to create an innovative Google TV product, especially when Google TV goes open source in 2011.

TiVo on the other hand is already in the dumps (and not just its stock). The company is a dinosaur and doing something like adding Netflix integration to a DVR is not going to save it. With the Dish Network partnership, Google already has the problem of DVRs handled and we're sure other cable or satellite providers will soon join in. After that happens, who's going to pay money for TiVo?

Google has shaken up the television industry in a whole new way today. It'll be very interesting to see how this plays out as we near closer to the Fall 2010 launch date.

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Tv google

Google TV is going to be very interesting. It is far from a certainty that it will be more than Apple TV in terms of consumer sales. From a first glance the Marketplace is the most important and interesting element of the announcement. As a development platform, Android creates the potential for untold unique and interesting applications that could capture users imagination. Early on, I don’t think TV oriented apps will have the most impact. If I understood the announcement, in the beginning of 2011, there will be an Android Marketplace. The money and the opportunity won’t be in TV apps. It will be in gaming and social apps. The low hanging fruit will be in taking apps that work on facebook and Iphone/Pad and moving them (if they haven’t already) to the Android platform and upsizing them to take advantage of working on a big screen.

The Google TV box could be a very cool and hopefully inexpensive gaming console. That is where the money will be.

What about TV ?

The success of Google TV will come down to one thing….PageRank. Can you imagine the white hat and black hat SEO battles that will take place as video content providers try to get to the top of the TV Search Listings on Google TV ? Like Google said, there are 4 billion TVs and growing and the US TV Ad market is $70 BILLION. There is a lot at stake if Google TV takes off. How Google does its PageRank for this product will have a bigger impact on the success of the product in the TV market than anything else it does.

If you search for “House” on your Google TV and it returns a Youtube Video of some kid doing a parody of the Fox tv show House, you can bet the shit is going to hit the fan. Not that Fox or any big media company will sue Google. I don’t think they will. What will happen is that they will “turn off” the Google TV Chrome Browser, just as they did to Boxee. They will fight and possibly sue over what meta data is used to determine search results. It will be a mess. That would kill the product because if it doesn’t work with the TV shows you want to watch, why buy it ?

On the flipside if the best Google offers users is what they showed in today’s demo, returning 5 or fewer results from a search with content from the cable/sat provider showing first and possibly consuming all 5 results, every internet content creator is going to scream loud and long at Google for putting them at a disadvantage. No one is going to be able to find your video if you show traditional TV shows first and dont show more than 5 results. They aren’t going to be satisfied with referrals or Google Suggestions as their only access to Google TV users. They are going to claim that this is all just a ruse to get them to advertise and that Google sold out to big media.

Even if Google lets the user decide how to rank results, it creates too much risk for TV content providers and their distributors. More mess.

On the other other side, if traditional TV makes it to the top, Google TV is the best thing to ever happen to Cable , Satellite and Telco TV providers. Why ? Google just solved their biggest problems, their user interface and programming guide. Not only that, if Google TV is what big content providers and distributors consider to be a good partner, they just off loaded much of the future R&D for the set top box to Google and its partners and developers. Should cable and companies adopt Android on their set top boxes ? They will watch and decide. Even better for the TV Providers, maximum utility from the Google TV comes from having a TV subscription. They may actually gain subscribers as a result of this product. Which is exactly why Charlie Ergen had Dish Network participate. Its win win win for Dish Network

Google TV isn’t the answer. It’s the question. I’m sure Apple, Microsoft and even Facebook have an opinion on the announcement. Their response will be even more interesting.

The Future of TV is….. TV. But Google sure sped up the timeline today.

The best analogy for traders ? They are hackers

My last two posts were designed to stimulate discussion. But lets talk the real problem that regulators, public companies, investor/shareholders and traders face. The problem is that Wall Street doesn’t know what business it is in. Regulators don’t know what the business of Wall Street is. Investor/shareholders don’t know what business Wall Street is in.

The only people who know what business Wall Street is in are the traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It’s a platform to be exploited by every technological and intellectual means possible.

The best analogy for traders ? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade because they provide liquidity to the market.

I recognize that one is illegal, the other is not. That isn’t the important issue.

The important issue is recognizing that Wall Street is no longer what it was designed to be. Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days ?

I started actively trading stocks in 1992. I traded a lot. Over the years I’ve written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.

Over just the past 3 years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game than I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.

The Pimco (who I think are the smartest guys on the Street) guys talk about a new normal as it applies to today’s state of the world economy. I think just as important is the new normal as it applies to Wall Street. Wall Street is now a huge mathematical game of chess where individual companies are just pawns. This is money in the bank for the big players like Goldman, Morgan, etc. Why ? Because the game of chess is far too complicated for 99pct of the institutions out there investing money. So to keep up, they turn to Goldman, Morgan and the like to invent products for them. “You don’t know how to play the housing boom, let us show you”. “You think the housing boom is about to crash, let us show you how to play that”. “You think that PIIGS are in trouble because they can’t print money to pay debt holders, let us create a product to allow you to play that game” The big houses have the best hackers in the business and they put together the games and sell them to the many, many institutions managing Billions and Billions of dollars. They are the ultimate Hackers selling their attacks to the highest bidder, regardless of which side they are on. That is a new normal.

Again, I’m not passing judgement one or the other. I’m just recognizing what is going on in the financial world today.

It’s rare for companies to go public these days. Just as rare for secondary offerings. The only thing that keeps me in the market is that most of the stocks (not all) pay dividends or some other sort of cash payout. For the first time in my life, I bought outside the United States. I bought Australia in a big way because it is becoming increasingly hard to find new domestic investments that are not influenced by the “hackers” and the games being played on a macro level. It’s hard to believe, but evaluating countries as an investment is now easier than evaluating companies . Even with all the unrest in Europe. Or maybe because of it.

So back to the original question. What business is Wall Street in ?

Its primary business is no longer creating capital for business. Creating capital for business has to be less than 1pct of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn’t shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which i think are always a mistake), then flows into companies in the form of equity.

My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether its through a use of taxes on trades, or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 5 years or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won’t come from traders trying to hack the financial system for a few pennies per trade.

And solutions won’t come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.

Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks they make will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the US and World Economy nearly enough for the risk of collapse they introduce into the system.

Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The Government needs to create incentives for this business and extract compensation from the traders/hackers for the systemic failure level of risk they introduce.

There will be another crash, because there are too many players looking for the trillion dollar score. They can’t all win, yet how many do you think wouldn’t risk everything, even what is not theirs, for that remote chance to score big ? Put another way, there is zero moral hazard attached to any trade. So why wouldn’t traders take the biggest risk possible ?
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