Smart TVs: Not Such A Smart Idea

from the Temporal-Pre-crime dept

A Smart TV is a TV that includes at least a rudimentary OS, access to web and Internet functions, and streaming content. They have been a hot product category at the last two CES shows, and the rumor that Apple is about to launch one is adding fuel to the fire. The Apple rumor is somewhat reliable, since it is partly based on a quote from the Steve Jobs biography where Jobs says of the Smart TV: "I finally cracked it."

But having looked closely at the offerings at CES, and comparing them to the mobile phone industry, I don't believe that the entire concept of putting extensive intelligence into the TV is a wise one. The reason is mostly because of the temporal mismatch between the lifetime of a TV, and the lifetime of a mobile device, mobile OS, or mobile processor. You see, people want large screen TVs, and these are expensive investments. The main screen in most American homes runs around $1,100. And those screens are designed to have a half-life of around 60,000 hours of viewing. Now, it's not clear how long the average consumer will keep a 1080p TV bought in 2012, but I'd suppose that 10 years is not a ridiculous guess, so humor me and work with 10 years.

So if there is one component of the Smart TV that costs $1,100 and lasts most people about 10 years, does it make sense to mate it to the "smart" part? The cost of the "smartness" is fairly easy to estimate: A Roku box, Google TV box, or Apple TV box run around $70-$100, a Boxee box goes for around $200. So, the "smart" factor runs between $70 and $200 street price. But what is the life-cycle of the average "smart" device? For that, I look to the phone market, where people cycle their smartphones every two years. Apple fans line up at the store to replace their one or two year old 3GS for a 4G because of added features and function. On Android and iOS alike, the latest OS versions, features and apps only work on the latest hardware. Does anyone here have an old phone or smartphone sitting in a drawer? Yes? Do you want to do the same with your $1,100 TV investment? It's a given that a TV is not a smartphone, but for now we're asking them to do similar tasks: apps, streaming media, social updates, etc. The Internet performance of the TVs will become out of date like smartphones do. Tying relatively cheap, 2-3 year life-cycle smarts to an expensive 10 year product just doesn't make sense.

It seems the obvious solution is already here: keep the TV dumb, and provide a set-top box (STB) that has the smarts. The STB can thus be replaced cheaply, once out of date. Consumers can easily have more than one STB, not committing to any one company's ecosystem. Do people really want to buy their TV's by ecosystem? "Hey, I love this Sony's picture, price, and size...but I want an iCloud, so I'll buy this smaller TV instead."

Really, the Smart TV is just a sales vehicle dreamt up and promoted by the TV OEMs. They had a bang-up decade updating everyone to flat panels, then pushing the upgrade to 1080P. They've had less success with 3D, and are looking for the hook to make another upgrade worthwhile. For now, Smart is it. But I doubt customers are eager to jump on, given they can just buy a STB. Even those actively looking for a TV may resist if there is a price premium, given most Blu-ray players and many cable or telco STBs already provide smart features. The TV OEMs are going to have to bundle in the smarts for free, and hope that they can make money back on the content ecosystem. But will they enjoy ecosystem lock-in for 10 years, or less?

So far, the Smart TVs sold to market are too new to have suffered from the life-cycle mismatch. The earliest Smart TVs can still compete on level ground with the latest, since it's only been a year or so since they've been in shops. But it won't be long until we start hearing complaints from those customers that "I can't stream that resolution." or "Why can't I watch programs with that new MP4 codec?" or "That app doesn't work for me. Why can't I get the latest OS on my TV?" Some of those people will end up with a newer STB, and just obviate the smarts that had been built into their TV, much the same way most of us don't use the TV tuner that is bundled with our sets.

Ultimately, whatever the problem that Steve Jobs "cracked", or whatever smarts are provided by Sony, Google, LG, Samsung, etc. I think those smarts will be better placed in a STB (or tablet, or other smart device) than in a TV.

Filed Under: set top boxes, smart tvs, tv