Connected TVs approaching their Michael Dell moment?

Connected TVs As the curtain goes up on the Consumer Electronics Show in Las Vegas this week, TV set makers could be tempted to throw up their hands. The proliferating number of embedded software platforms, app stores and chip-sets for connected TVs and set-top boxes, to say nothing of web-based content services like Netflix, Hulu and CinemaNow looking for real estate on connected devices, figuring out what sets to build has become a lot more complicated than deciding on LCD or plasma screens.

More fraught, too, as those set makers who had thrown their lot in with Google TV discovered just last month, when Google asked them not to display their Google TV-enabled sets at CES and to delay their commercial rollout until Google could fix some “software problems” with the format.

Worse, set-makers are also facing increasing pressure from third-party interests to incorporate specific components, software and functionality into their models, regardless of its implications for the manufacturing process.

Last month, Sears announced a partnership with Sonic Solutions to introduce its own virtual storefront for connected TVs, Blu-ray players and other devices called Alphaline, based on Sonic’s RoxioNow streaming platform and the CinemaNow content service. While the announcement met with some skepticism, given Sear’s lack of experience in the online services business, there was one sentence buried in the press release that should give TV set-makers pause:

Sonic and Sears are teaming to embed the services at a chip level on a growing network of devices including portable media players, Blu-ray Disc players, mobile phones, and high-definition television sets from leading manufacturers.

While the press release doesn’t say so in as many words, that sentence at least raises the possibility that Sears will insist that set-makers incorporate the Alphaline chip into devices they intend to sell through Sears (and presumably Kmart, which is owned by the same holding company).

Similar bespoke sets may soon be required by Best Buy, which has its own embedded storefront strategy, as well as Wal-Mart, which would like to see its Vudu platform and movie VOD service in as many connected devices as possible.

On Wednesday, Intel is scheduled to formally unveil its own online movie service at CES in conjunction with its new line of Intel Insider chips that combine central and graphics processing on a single piece of silicon that will allow the chips to handle full 1080p streamed video. More critically, the chips for the first time incorporate hardware based DRM, a feature aimed at wooing the Hollywood studios to make their movies and TV content available in 1080p online.

While initial deployments of the new chips will focus on PCs, it won’t be long before chips that incorporate such hardware-based security become de rigeur for connected CE devices if they hope to inter-operate with online services that provide HD video streaming.

It’s still very early days for connected TVs. But if the complexity of matching chip-sets, software platforms, services, app stores and security continues to grow, traditional manufacturing systems will come under growing strain. What happens to manufacturing economies of scale if you have to build different versions of the same model for different retailers, incorporating their preferred software and chip-sets?

It’s enough to make you wonder whether other manufacturing approaches might some day become feasible for connected CE devices, like the build-to-order approach pioneered in PCs by Dell Computer: Choose your preferred graphics processor, your own pre-loaded software and services, the capacity of the on-board hard drive or SSD for recording or storing downloaded content, and we’ll ship it to you.

I’m being partly facetious, of course. There are probably a thousand and one reasons why build-to-order could never work for HDTV sets. But the industry is rapidly getting to the point where simply slapping different screen sizes on essentially the same chassis and calling it a day won’t cut it any longer.

Further reading

What the hell is going on with TV?

Major consumer electronics makers introduce Netflix one-click remotes

After 2010, Hollywood needs a game-changer