Logitech Financials Crushed by Failure of 1st Gen GoogleTV

Google launched GoogleTV with much fanfare. It was to be a serious competitor in the digital home front backed by a major player. Logitech was one of the big consumer electronics companies backing the new GoogleTV platform with their Logitech Revue set-top-box. Unfortunately GoogleTV hasn't found much success with it's first generation of software and associated devices. This weak performance was amplified this week with Logitech's financials showing the sales of the GoogleTV-powered Revue devices very poor. Matter of fact Logitech experienced more returns of the devices in the first quarter of the year than they sold!

Logitech has now dropped the price of the GoogleTV Revue down to $99 after dropping it to $199 this past May. My guess is they are desperate to just unload these and hope to recover at least some of their costs. Google doesn't seem to be giving up on their GoogleTV platform even though they haven't captured the attention of many consumers thus far. For GoogleTV to get traction they need to do the following - and do it quickly:

1. Make expensive agreements with content providers to get TV/Movie content. Alternatively, aquire a company already doing this with longer-term agreements. Hulu fits this category nicely as long as the purchase includes a deal with the content providers long enough to make the money spent worth it. Given Google's focus on online streaming, this is crucial - more crucial than apps or anything else.
2. Make the TV smart enough to compete with your dumb CableBox DVR. I know many have argued that Google isn't interested in tuning or capturing TV content. I beg to differ - while I do think tuning wasn't high on Google's list of priorities at first, I think they know this is a feaure consumers expect when you have "TV" in the product name. This doesn't HAVE to be CableCard at first - it could be a OTA and open QAM tuner, things SageTV (Google just purchased HTPC/DVR Software Firm, SageTV recently) did very well. Longer term CableCard or the next iteration of CableCard - AllVid.
3. Make mobile an important extension of GoogleTV. I'm thinking of placeshifting (like Slingbox) and media control from any mobile device here. The more features you can put on devices people already own, the more apt they are to be interested in yet another box for the home.

Logitech is taking a major hit here on Google, so much that their CEO, Gerald Quindlen has stepped down and their sales, revenue and outlook are extremely weak now. If Google wants to attract the CE companies likely eyeing Apple's digital home ambitions, they need to act fast and produce something very improved. It should be interesting to see how things turn for GoogleTV.

It sounds like May's price reduction of the GoogleTV-based Logitech Revue to $199 wasn't enough to goose sales of the struggling device because Logitech has decided to reduce the price again this quarter to $99. Apparently, the whole affair has been enough to cause Logitech and now former CEO, Gerald P. Quindlen, to part ways. Even with the new pricing, it's a bit difficult to imagine the Revue taking off in any meaningful way until the GoogleTV platform itself has been updated and considering that several content owners have blocked the device. What do you think? Can a $99 Logitech Revue compete with the likes of AppleTV and Roku?

From the Logitech Press Release:

"Sales of Logitech Revue were slightly negative during the quarter, as returns of the
product were higher than the very modest sales. We believe the significantly lower
everyday price for Logitech Revue, reduced from $249 to $99, will generate improved
sales."

Read the full press release here

AllVid Alliance Formed – Founding Members Include Sony, Best Buy & SageTV

The battle lines between the Consumer Electronics Association and the National Cable & Telecommunications Association (NCTA) are being drawn over AllVid.  AllVid is the expected replacement for CableCard being discussed by the FCC and a group of seven companies from the electronics industry has now formed the “AllVid Tech Company Alliance.”

The AllVid Tech Company Alliance was formed to provide a unified voice for the consumer electronic companies to ensure the NCTA doesn’t try to cripple AllVid to the point they did with CableCard.  The alliance has seven founding members including Google, Sony Electronics, TiVo, Best Buy, Mitsubishi Digital Electronics, Nagravision and SageTV.  The alliance supports the “gateway” approach to providing TV & video service across the network.

Why is this important to Home Theater PC users?  Well if you want to connect a Home Theater PC to time shift your TV content, your options are limited if your Cable or Satellite company encrypts their content like nearly all do in the U.S. today.  In this case you’ll need either a CableCard tuner or a Hauppauge HD-PVR with your set top box.  Unfortunately CableCard these days is a solution only for TiVo and Microsoft Windows 7 MediaCenter users.  The NCTA is trying to argue that online streaming products like the GoogleTV and others that provide Netflix

One of the NCTA’s arguments is that products like Apple TV and Google TV along with Netflix & other streaming services on those devices mean AllVid isn’t needed for consumers.  They would rather just let CableCard die out without a replacement and in the end consumers would have the “option” of a cable box or a streaming box.

There is no guarantee AllVid will make it through the red tape and lobbying mess of the FCC, but quite a bit of progress has been made already.  And make no mistake about it – the stakes are huge for any consumer electronics company that wants to provide their own SageTV HTPC, TiVo, GoogleTV etc for the future.  The Cable industry wants to control how the content can be viewed and protected – and they want to be sure it’s on their own devices.  The CE industry wants to provide you, the consumer options – and of course make money providing those options to you. 

It’s notable that the founding members include heavy-weight companies like Google and Sony but also a small company like SageTV is included.  What surprises me the most are two companies in particular missing from the mix:  Microsoft and Apple.  If either of them plan to work outside of the NCTA’s grip, one would think they would have already begun voicing their opinions with the FCC by now.

I listened in during the last public FCC meeting on this topic and I’ll be watching the FCC to see what happens next.

Read more at Twice.com , Multiichannel.com and Arstechnica

Wiki article on AllVid