Are you ready to buy your new high-definition, connected, smart TV from Yahoo? It may seem like a stretch for an internet company to get into the home-entertainment appliance business, but last week's news that China's largest internet company Tencent is launching the "Ice Screen," it's own branded multimedia TV set, should give you a sense of where the consumer electronics world is headed.
The Ice Screen will be a 26-inch, high-definition, connected TV and will sell for under $400 and will be plug-and-play for not just internet connectivity, but for web video, online gaming and Tencent's many web services, including its market leading messaging service. Given the fact that Tencent has more than 750 million active users each month -- nope, that 's not a typo -- a Tencent TV is likely to have a not-too-insignificant impact on the China TV market.
Where is the consumer electronics market going? Some things seem quite clear about the future of the market. Making consumer electronics, from TV's to mobile phones to gaming devices to washing machines, is no longer just about hardware, and more and more about computer chips, software, networking, user interfaces and media experiences.
Apple, once a home-computer company is now the most valuable company, having branched into music players, phones and tablets, and makes money on the software, applications, services and content utilized by those devices. Google is pushing hard into its own line of Nexus tablets, and bought Motorola to boot. Microsoft's fastest-growing product line over the past 10 years has been it's Xbox-connected gaming devices. Amazon with its Kindle Samsung has quite publicly split into a chip business and a consumer-electronics business operating under the moniker Digital Media, not just Consumer Electronics.
Why would Yahoo even consider building a TV? Isn't mobile where it's future is headed? All we're hearing and reading these days is about how the future is all about mobile: sales of smartphones and tablets are dramatically surpassing those of laptops and desktops; web page views are declining while mobile browsing is exploding; and its certainly conventional wisdom that internet and media companies today without a mobile strategy and a strong suite of mobile products are doomed. As true as all of that might be, I don't think any of it means that we won't -- or shouldn't -- see internet companies becoming the dominant suppliers of new TV sets within five years. Here is why:
Screens are not mutually exclusive. Mobile is certainly going to drive a lot of the future of media, web services and commerce, but the future is going to be multi-screen, not just mobile, and executing on a mobile strategy does not mean that a company can't also have a TV strategy.
TV will remain critical for entertainment media business. Certainly, mobile devices in the future will be used to view a lot of video and play a lot of games, but U.S. media consumers today pay more than $100 billion a year to access programming, movies and games on their TVs. If internet companies want a big piece of that market, they will have to get intimate with the TV device.
The TV device is even more critical for brand advertising. The book on web banners capturing a significant share of brand ad spend is just about closed. This year, according to IPG's Magna Global, TV advertising revenue in the U.S. will grow faster than web display, on a base that 's about five times bigger. Mobile devices will be extraordinary at supporting e-commerce, search and couponing, but handheld screens will never be a match for causing people to laugh or cry or develop awareness of or an affinity for a brand as compared to a big screen on the wall to which a leaned-back viewer is surrendered.
Controlling hardware and software creates big advantages to controlling user experience, media and market adoption. A big reason Apple won in music players, tablets and smartphones was Steve Job's strategy to keep the hardware, software and media tightly integrated. Apple wouldn't be the company it is today if it had relied on companies like Diamond Rio to provide the listening platform for its iTunes business. If we believe that the TV experience of the future is going to evolve in ways similar to the emerging user experiences on smartphones and tablets, then companies who control the devices are going to have a big advantage controlling the U.S.'s $100+ billion video content and $75 billion video advertising businesses.
It's easy to do. In this area of tight end-to-end global supply chain, build-to-order consumer electronics manufacturing and speedy drop-shipping to any point on the globe, anybody can make a TV today, as long as you have the will, the capital and the ability to market.
And it's been done before. Let's not forget that in the early years of both radio and TV, companies like RCA and General Electric had positions in both content and user devices.
Do I have any real scoop that Yahoo is actually considering launching its own TV? I'll let you know when I get off the phone with Marissa Mayer. Ms. Mayer's Yahoo is about product, and since bold moves are the only way forward, why not forget all these TV and second-screen apps and just build and own the TV? What do you think? Are all of our consumer electronics in the near future going to come from internet companies?
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