Google won’t recover quickly from Google TV debacle

Web TV How’d you like to be the guy at Toshiba or LG who recommended going with Google TV right now? According to the New York Times, Google asked TV makers last week to delay their planned introductions until Google can make improvements to the software and to pull Google TV displays from their exhibits at next month’s Consumer Electronics Show in Las Vegas. Toshiba, LG and Sharp have agreed to pull Google TV from the show floor while Samsung plans to go ahead with its planned exhibit of two Google TV models, according to the Times. Sony and Logitech are expected to continue selling their current Google TV-enabled devices but it is unclear how aggressively they will push them at CES.

The delay is a major embarrassment for Google, or course, which unveiled Google TV to much fanfare earlier this year and is locked in a pitched battle for dominance of the digital living room with Apple, Microsoft, Netflix and other rivals. But the ultimate damage to its position in the market could be far greater than mere embarrassment.

That’s because the electronics makers that went along with Google TV now have something worse than egg on their faces. They have holes in their lineups in critical product categories in a business with 18-month development cycles.

Worse still, competitors that went a different way will not face those same holes, in a business where tiny shifts in market share can mean the difference between profit and loss.

Investments in technology are hard to recover in the CE business in the best of circumstances. Sinking cost into the chips and other technology needed to support new functionality such as Google TV, only to have that functionality slip away, is close to a disaster. Presumably, Google was subsidizing some or all of those technology costs for the hardware makers, at least initially, so the loss probably isn’t as bad as it could have been. But there’s still the opportunity cost to the diversion of resources into a technology is is now unlikely to deliver any return in 2011.

As Forrester analyst James McQuivey noted to the Times, “Google as a company is not a particularly partner-friendly or partner-focused company.” But Google has now revealed itself to be a downright unreliable one. It might be possible to get away with that in the software business but in a cut-throat business like CE, that’s a very bad reputation to have.

Even if Google were to persuade the networks to let it access their streaming content, I doubt that guy at Toshiba or LG, if he’s still in the job, is going to be quick to recommend rolling the dice a second time on Google TV.

Further reading:

Sony Warns on Television Earnings

Sony Optimistic About Google TV Despite Setbacks

5 Ways to Save Google TV

Is Intel Already Distancing Itself From Google TV?