Motorola Could Get Google Closer to Your Living Room — If the Cable Guys Play Along
The last part isn’t getting much attention, but Google itself mentioned its interest in Motorola’s big set-top box business during today’s call announcing the deal. And some Wall Street analysts and other observers are making positive noises about the possibility of Google, which has tried and failed for years to make headway into the TV business, to finally make inroads.
Could be! I’m skeptical, though.
A couple basics: Motorola’s “Home” unit accounts for about a third of its revenue. It’s not a sexy or high-growth business — last quarter, revenues increased 2.3 percent — but unlike handsets, it is profitable. Last quarter it generated operating earnings of $67 million on $907 million in sales.
It is also the biggest cable set-top box business in the world. The reason that you, the average consumer, don’t know or care whether you’ve got a Motorola box next to your TV is that you don’t really have a choice — Motorola sells its boxes to the cable and satellite guys, and they turn around and rent them to you. As long as you’re getting pay TV, you’re using a box from Motorola, or perhaps Cisco’s Scientific-Atlanta unit (Cisco is going to stop making the boxes itself, but will stay in the business.)
The reasonable notion is that Google, which hasn’t had much success getting the cable business to work with it in the past, could do so now, via Motorola’s longstanding relationships with the cable guys.
But I don’t think Google hasn’t made progress with the TV business — both the cable providers and the networks that provide them with programming — because the guys from Mountain View can’t get meetings. It’s because the TV business is paranoid about what Google could do if it ever did make headway in the TV business.
The cable guys don’t have a problem working with Motorola, Cisco, etc., because those companies have never shown any inclination to compete with their core subscription business, as GoogleTV theoretically does.
And while the cable guys do want better, cheaper, more powerful boxes — ones they could upgrade without sending out a guy with a truck, which gets very expensive — it’s highly unlikely they’re willing to let Google offer to help them out. Note Comcast’s “Excalibur” project, which in many ways is supposed to be a GoogleTV alternative, controlled by the cable company itself.
And even if Google does make headway in the box business, it’s still going to face plenty of challenges with the programmers who push stuff through those boxes. They’re the same ones that kept their stuff off of GoogleTV when it rolled out last fall.
And while it’s possible Google could change its mind — some big checks might help — I don’t see them getting more comfortable with the notion any time soon.
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