In case you missed it last week, Google announced its new TV service in Kansas City based on a gigabit, fiber-to-the-home network. Leaving aside the broadband component of the offering for this post, the new Google Fiber TV service relies on all-IP delivery (a la AT&T’s U-verse) and high-speed residential connections (a la Verizon’s FiOS) to package up TV in a new Internet-style fashion. Wi-Fi access, Netflix and YouTube are built right in. Everything is searchable (linear, on-demand, app content, etc.) and placeshift-able. And Google is already working on features like a button that lets you “plus one” a show, and the ability to let you tune to a new station from your social stream.
On the gadgety goodness front, Google is proffering a slim DVR Storage Box with two terabytes of storage, even slimmer client TV Boxes with Wi-Fi access points included, and a free (for now) Nexus 7 tablet with remote control application. Brent Evans (aka geektonic) notes that part of the old Sage TV team is also behind the Google DVR, which bodes well for its performance.
Google’s content deals fall squarely in the fair to middling range. The company has negotiated licensing (so far) with nearly all of the broadcast networks and several cable channels like Nickelodeon, Showtime and Discovery, but there’s no Fox, Disney or ESPN, which would be a deal-breaker in my house.
All of which leads me to where Google is headed with Fiber TV. After watching the cable market for years, and recent broadband build-out activity, I can make a few wild guesses… some of which may even turn out to be right.
Prediction #1: Google TV is not about TV
The margins in the TV service business stink right now. Retransmission costs are higher than ever, and Google doesn’t have the clout of a large TV audience base to give it a good negotiating position with programmers. Also, as Ryan Lawler points out, Google isn’t experienced in the customer service game, which is a big part of TV delivery.
Instead of getting into the TV biz for the long term, I’m betting that Google is launching the new service primarily to gain information – information like what it takes to make fiber-to-the-home deployments profitable, and what data you can collect from users when you combine IP-based television with other Googlicious services. After all, keep in mind Google’s mission statement: “To organize the world’s information and make it universally accessible and useful.”
Prediction #2: Google is creating another platform
Even though Google may not want to stay in the entertainment business, it no doubt sees a big opportunity in content management and analytics. These are both areas that the traditional cable guys (and TiVo) are trying desperately to get a handle on today, and they fall right within Google’s sweet spot of core competencies. There’s a lot of money to be made in advertising by anyone who can do a good job of organizing TV content and tracking viewer behaviors. Why shouldn’t Google create a management platform and then license it out? This is the perfect time to do it because operators are starting to make their own transitions to IP delivery. And Google has the credibility to sign on customers, plus a thousand and one ways to plug TV information into other data platforms. The mash-up opportunities are endless.
Prediction #3: Google’s best features will end up in other services
This one’s a no-brainer. Just like Verizon FiOS inspired the cable guys to step up their game, the Kansas City TV deployment will end up pushing feature innovation among the traditional providers. Google’s already working on ways to let users publish local content, it’s adding social features, and it’s expanding TV access to more devices. Not that everyone is going to rush to do all the same things at once, but ultimately the cable and telco TV guys will have to adjust to consumers’ new expectations. After all, this isn’t just web video anymore. It’s TV – something Americans love even more.
Spot on.
You saved me from having to write this post ;)
Nothing to add really, except that giving out the tablets is a pretty big development.
I’ll be interested to see (a) how the tablet interface works from a UX perspective, (b) how consumers react to it– do they like it or do they miss the old school remote, (c) what else you can do with the tablet (e.g. is there a browser, email client, etc.) and the big one, (d) what sort of second screen experience will they offer and what sort of ad play will they make?
If this proves successful, it should be a huge boom for 2nd Screen devices – I’ve said that eventually we’ll all be getting tablets from our providers the way we now get set top boxes, just didn’t see it happening for a couple of years.
This speeds things up.
But again, excellent analysis, Dave.
BTW – I wound up buying a Joy Factory Connece-the-Dots iPad case, thanks to someone’s recommendation on here and it’s awesome – exactly what I wanted and never have to worry about my iPad falling as I’m reading it on the train.
I know personally I would not want a remote where the entire device is a touchscreen. I found that out in the early 2000’s when I used a Phillips Pronto remote to watch my HD recordings. While it worked very well, it was very annoying to always have to look at the remote every time you needed to use it.
I think the best remotes are a combination of a touchscreen and hard buttons. That way you get the best of both worlds. Ever since the Harmony One was released I had a remote that was the closest to being perfect for my use. I had gone through at least a dozen remotes during the 2000’s trying to find one that worked extremely well. And once the Harmony One came out I finally found it.
Google has a lot of cash but doesn’t know what they want to be when they grow up… hence all the random initiatives.
“Google has a lot of cash but doesn’t know what they want to be when they grow up… hence all the random initiatives.”
Bingo. I think they more or less apply the “20 percent time” thing to the company as a whole.
And we still don’t know what Google is planning for their Motorola set-top business… other than it’s apparently not part of the Google Fiber TV initiative.
Supposedly the Google Fiber TV boxes (but not the network or storage boxes) are made by Motorola, but all the branding (on everything) is Google.
Interesting predictions – I like the “platform” one the best.
Here’s my prediction:
Google Fiber is going to be big. Not just the gigabit internet service, but also the TV stuff inside that not many people are talking about is a huge, under-the-radar salvo to the cable companies. There’s a lot of power under the hood and I can’t wait to try this stuff out under it’s new “owner.”
I doubt the Motorola set top business has much of a future personally.
“Google Fiber is going to be big. Not just the gigabit internet service, but also the TV stuff inside that not many people are talking about is a huge, under-the-radar salvo to the cable companies. There’s a lot of power under the hood and I can’t wait to try this stuff out under it’s new “owner.”
I disagree with most of your contentions, though not every single one.
But I will note that you live in Kansas City, which means that this all means something very different for you than it does for most folks.
Simply put, it don’t scale. I don’t think Google is going to roll out fibre to the home nationwide or worldwide beyond this little pilot project, which they’re doing primarily because they like tossing away a certain amount of their money and their employees time on fun one-offs.
Brent- I was waiting for you to respond. I have to say, I don’t think it’s fair to compare Motorola (or Cisco, or Arris) to Google’s hardware given that the traditional set-top vendors only deliver what the operators pay them for. Trust me, the vendors would love to add more power and more bells and whistles, but the MSOs don’t want to pay for it. Also, I would note that all of the set-top vendors have been carefully making shifts into video software. They recognize that set-top hardware is a limited business going forward.
All of that said, however, I would also note that if Joe is right that Motorola is actually the manufacturer of the TV boxes but not the Network or Storage devices (and I have no idea if that’s actually true), then that doesn’t bode well for Moto. The client boxes are undoubtedly low-margin. All they show is that Motorola has an efficient supply chain, not that the company can add any high-margin intelligence to its hardware.
Oh yeah, and Chucky, I agree that this doesn’t scale. But I don’t think Google is tossing away money. I think it’s got a very valuable experiment going.
Well, since Verizon seems to be packing it in after designing a truly wonderful TV delivery/internet vehicle while AT&T U-Verse with its skinny pipes and much lower cost per household continues to roll out, I’ll have to agree with Chucky that this probably isn’t going national any time soon. Its probably too expensive.
But I hope I’m wrong. That said, I don’t think Comcast et al should be sweating in their boots just yet…
The longer Google fails to discuss Motorola’s non-phone business, the sooner customers will defect and the less money they’ll make when they try to unload it.
I agree with Chucky and Glenn here… Given the Verizon FiOS TV experiment, I’m not sure how huge this will be (on a national scale). It takes a lot of time, money, and jurisdiction-by-jurisdiction approval to launch these services. And when you’re done, the incumbents will retain the lion share of customers. Having said that, we’re obviously in the midst of a huge data & entertainment transition – anything is possible and Google Fibre is surely worth following. If I lived in Brent’s neighborhood, I’d partake.
“Given the Verizon FiOS TV experiment, I’m not sure how huge this will be (on a national scale)”
FWIW, I think Verizon is likely happy with the FIOS buildout.
They scooped up all the low-hanging fruit – aka the good income demographics in geographically compact areas. In other words, I think they’d do it all over again. (If the economy hadn’t gone all blooey for a decade, they might have built-out a bit further, but I seriously doubt they would have gone a lot further. I don’t think that was ever their plan.)
But the non-low-hanging fruit is a whole ‘nother flock of seagulls. Ain’t no profit-seeking corporation going to put FTTH in Idaho. Too bad the Feds can’t borrow money at negative rates for 20 years to build a national FTTH infrastructure in order to increase national productivity and public well-being in the long-term while decreasing unemployment in the short-term. Oh, wait, they can borrow money at negative rates for 20 years? Never mind.
Well, there’s two issues here… The expense and deployment of fiber is one. The other is the licensing to offer television services which can be a total bitch as it varies from city to county to state and the incumbents generally fight back in some way making it an even more tedious (and costly) endeavor. All I know is I’m looking forward to getting back on Verizon’s pipe when we move next month.
“But I don’t think Google is tossing away money. I think it’s got a very valuable experiment going.”
It’s a floor wax and a desert topping!
They are throwing away money, and they are getting a chance to get their feet wet splashing around in a kiddie pool in return. It’s not business; it’s Bell Labs basic research.
I’m not saying that’s a bad thing. I actually think the whole “20 percent time” concept, (in both employee time and company money), makes excellent sense for Google due to very company specific reasons. The way the stars align, Google has strategic need for lots more hobbies than the average company.
(And can I call you “Dave” like Alan Wolk does upthread? I wouldn’t have guessed that as your nickname.)
A reader just sent us a note to a GigaOm article with some first hand experience. It’s a nice stop gap until Brent gets hooked and heats up his blog again.
In the “you might be interested” category…. Some real-world experiences with a Google Fiber installation. A KC-area blogger tested a actual Google Fiber installation (in other words, it’s not part of the demo Google media/customer center) and tests the speed doing normal things (like watching the Olympics via NBC’s streaming site and downloading Apple software updates and torrents). There’s also a screenshot of what the Google router’s gateway UI looks like. Good geeky stuff :-)
http://gigaom.com/2012/07/31/google-fiber-in-the-real-world-heres-whats-good-and-what-needs-work/
I call him “Dave”. (Less so now than in days gone by when we worked at the same place, but that’s life.)
Now that I think about it, I’m pretty sure I’ve never called him anything BUT “Dave”.
Now Mari, on the other hand, I’m sure she’s called him all sorts of things at one time or another . . . . ;-)
–Dwayne
Right… but Mari wrote the post and don’t usually go by Dave. ;) Remember years ago when Netgear named a streamer after me? I should probably point out I might have first learned about TiVo from Dwayne. At the very least, he was the first person I knew who had one. And the only person I knew who bought that greyscale Palm OS field phone.
Well, based on the FCC unearthing Engadget did a while back:
http://www.engadget.com/2012/06/05/google-fiber-gfhd100-ip-set-top-box-fcc/
It appears the DVR (able to record EIGHT simultaneous channels by the way) is made by Humax. Like others I’m somewhat surprised by this, thinking Motorola would be the obvious company to make this at least if Google were really moving forward with the Motorola cable stuff long term…
The GigaOm article (which apparently is going to be followed by another with more details of the hardware setup) makes it relatively clear that Google is using a PON architecture, which honestly should be fine. Will be interesting to see all the details as they come out…
Humax?!
I agree on the PON architecture. Shouldn’t be a problem.
Looks like this is what the Sage TV team has been up to actually, so I assume the Humax box is running updated Sage code. If you read this GeekTonic article, the screenshots look similar, and he actually has a Twitter thread where one of the developers confirms it has Sage DNA in it…
http://www.geektonic.com/2012/07/google-fiber-tvis-its-htpc-dna-sagetv.html
Seems like very good news? Would have preferred to see them integrate Sage into a more widely available retail product but hey, at least they’re working on something. Maybe once they get their feet wet…
The second article is up on GigaOm:
http://gigaom.com/2012/08/01/google-fiber-check-out-the-in-home-set-up-and-equipment/
I think this will be very interesting to see how this will play with the FCC and other regulators and lawmakers. In particular: this could greatly help the cause of those of us looking for ammunition against the cable and telcos with regards to net neutrality, channel bundling/unbundling, and set top box interoperability.
On that note, this now puts Google in the role of being the first “cable” company to have come out in favor of the AllVid standard as a replacement for the craptastic failure of CableCard/TruTwoWay.
Saying their internet service is anything like Verizon FiOS made me chuckle.
The only reason they did this is to show the country that telecoms are as full of sh*t as we’ve always known. Verizon FiOS is a nightmare and was mismanaged, leading to the project’s failure and Verizon giving the first consumer-aimed fiber in USA’s monopolistic broadband markets a bad rep to everyday users from the beginning.
Google did this to make a statement about internet access. The same statement we’ve been screaming for years and the FCC does nothing about – broadband in America is behind, poorly maintained, is limiting economic growth of areas outside NYC, Chicago and LA, could easily be fixed if telecoms were told to knock off the BS and is all around very broken because of lack of competition and all that good ole’ special interest money.
Google, like nearly all new business driving what small economic growth managed, has been held back (as have consumers and businesses) by telecoms refusing to keep up on their infrastructure and their practices involving systemically holding internet services back using data caps and confusing “speed tiers” – the highest of which is usually several times slower in most areas of the US than other countries who’s economy also relies on the internet… all to keep their cash cow cable running. I cannot agree that TV services are not lucrative. They have always been insanely profitable, even now more than ever since the telecoms use the “bundle” marketing to strong-arm customers into purchasing services they do not want to avoid paying more for the only service that is required. Cable is a luxury item that spews ads every 8 minutes and costs more than $80 a month. Instead of shifting to provide extremely fast internet service, which cable companies are very capable of providing even at lower prices then they charge now, they chose to lock down markets, lie about the capabilities of internet technology (and its cost, which is pennies on the dollar they charge to service you) and have worked with the entertainment industry in attempting to throw off Netflix’s momentum simply because it provides everything and more than cable for several dozen times less. Consumers are broke, and somehow the FCC allows this practice (and we all know how.) FCC needs to divert all regulatory fees away from consumers since they have turned their back on their very purpose and allowed cable companies to mislead the market (and our economies) into chaos, confusion and… yes… record profits for themselves. Why anyone would believe companies that are saying they cannot provide an infrastructure that wasn’t built in the 1980s for analog TV, cannot provide broadband speeds that aren’t a joke in America and have to impose data limits while they reap in this much money is beyond me. Margins on cable TV service stink only for those who are not in the “in crowd” (Netflix, in example, or any other single-region operator soon to be crushed by the Verizon-Comcast-Time Warner oligopoly.) If you’re in this existing oligopoly, you’re making so much money it’s worth risking the looming anti-trust cases and eventual cease of operations that will take place as consumers continue to choose better technology. It’s worth not innovating because you can just stockpile millions of dollars now and divest the company later when things go south. They are choosing not to be a part of the new upcoming technologies they could have easily adapted into – like how business worked before the 2000s… the business that supported the economy, not sponge it for whatever may be left.
Consider when they installed these old coax lines, cable could be had for $20 a month, and additional services weren’t advanced enough to be piped through yet. Now, consider that same investment is being used to power most of the country’s internet services, cable TV and landline telephones – each service costing well over $20 on its own in most markets. Basically, add the networking equipment, and that’s the only investment they cared to do. Considering the services have not improved since they were first offered and that after your “introductory blah blah” ends, an average household will receive a bill for about $150 for these three services – two of which the internet can handle more efficiently itself. Want just internet? You’ll be charged more, and good luck if you don’t have at least $60 a month to spare on it for a terribly slow 10mbps (if even) option. Need to actually get work done on the internet? It will cost you over the $100 mark to get about 25-50mbps, which is still extremely slow considering how much internet backbone costs the cable company compared to the extremely high cost consumers pay for broadband in the US. And god forbid you try to get business internet. A small 200-bed hospital in the midwest will dish out about $7,000 a month for a crappy 10mbps link to the outside world that cripples operation by not providing anywhere near the speed their operations require. $7k.
Screw uVerse and screw FiOS. Better yet, screw the Google Fiber TV service. It’s stupid and unnecessary because the internet can do it better. With a 700mbps connection that costs what the other swindlers charge for 20mbps to the consumer, this is a statement, one that Google has made on behalf of all of us internet engineers. It was heard loud and clear as soon as the project started, especially by the telecom industry, who will find they can’t lie their way out of getting up to speed now that the results have been proven.
It’s not about TV. It’s never been about TV – and that’s what they’ve shown. If we’re to move forward, we need real internet service providers. People who innovate in transmission of the interwebz. Not 13 minutes of shitty “3000 channels but nothing’s on” laced with 17 minutes of commercials.
I am extremely relieved that Google did this. It’s a light at the end of the tunnel for engineers like myself that have projects shelved because they’re just not technically feasible without moving to Chicago. Yes – in 2013, I will be moving to Chicago – leaving my life, friends & family, modest Columbus metro, glorious Ohio freeways and most hope on earth behind – all to be close to America’s few decent access to the internet backbone. I gave up on waiting and can no longer wait for the market to purge the telecom problem to start my business. You’d be surprised at this common problem, and if you need any proof of why it’s not government, but yet old animalistic corporations who use the money you pay them against you by buying your lifestyle, economy and future instead of re-investing it in growth. There will be money in the future, but only for the generations of today’s business mongul. He has taken the work of engineering and design communities and marked the beginning of the technological revolution with greed, economic collapse and nationwide blight with it. He knows he cannot compete in the long term, and he’s not ever going to be interested in what we’re making. His goal is to make as much money as possible for his investors right now by using his industrial revolution animalistic training and an outdated system of laws that were made in the days when a company couldn’t tank the economy, control entire industries and collectively destroy individual’s lives as they can do now. The sad part is, the telecom industry is regulated, and that supports my assertion that government regulation in this industry is completely inappropriate given there are standard bodies of engineers, business leaders and designers much better fit to frame the broadband landscape. It really makes you wonder if the FCC is completely blind or if the telecoms are threatening to kill their families, because the amount of special interest money that would have to go into having the organization completely disregard its own mission would have had to show up on the books and subsequently in court at some point by now… right?
Hopefully the Google internet project is a booming success and cause for them to expand it everywhere else, or it causes a sharp change in the management of these fatcow telecoms. Either way, I’ll keep running my mouth about it until the day comes or Comcast has me assassinated.
Mari & Dave,
I’m curious as to whether you still stand by the above predictions a year and a half later? Have any additional or revised predictions or thoughts about Google Fiber at this point?