Google's Vision for TV Proves a Turnoff

Google's hopes of becoming a force in television by releasing software that brings Web video and other online content—including ads—to the small screen appear to be fading fast. In recent months, stores and distributors selling one flagship Google TV device returned more of them than they sold as consumer demand fell.

That embarrassing statistic appeared in a July 28 earnings announcement released by Logitech. The announcement covered the fiscal quarter ending June 30. The company's Revue set-top box was announced in partnership with Google when the search giant introduced its TV software last October. Sony was also part of the launch, and sells television sets with Google TV built in.

But Google TV devices have gained little traction. They launched to poor reviews citing them as difficult to use, and met opposition from broadcast and cable networks wary of the Web content might undermine their hold on viewers. Competition from less expensive machines from Apple and Roku, as well as from game consoles, has been intense.

Logitech chairman and acting CEO Guerrino De Luca told analysts that Google TV has "not yet fully delivered on its own promises." His company had already cut the price of the Revue from $299 to $249. Now the price will be slashed to $99, on par with Apple and Roku's Internet TV devices. Logitech has other challenges, such as distribution problems in Europe that led to flat revenues. However the first Revue price drop and the returns cost Logitech $34 million, and contributed to the departure of De Luca's predecessor, Gerald Quindlen.

Google TV is not finished, though. Apple TV soared in popularity after a similar price drop last September, and Google says it's not giving up. "We launched Google TV with a firm belief that bringing the power of the Web into the living room will significantly enhance the television experience," a spokesman said in a statement. "We believe in this now more than ever."

A new version of Google TV will soon be released for new and existing devices later this summer. These devices may come with a simpler interface (consumers and reviewers have complained that the current version is too complicated).

Google appears to have long-term plans, too. It recently acquired SageTV, which makes software to turn a personal computer with a TV tuner card into a media center capable of recording, pausing, and streaming shows to devices around the home. Observers said Google bought the company more for the talent of its management team than its product, but it will take more time to apply that expertise to new software.