Google’s efforts to get into the television business have so far fallen flat.
Its much-hyped Google TV initiative, launched last year, fizzled out amid poor consumer reviews and a lack of partnership with the big cable operators.
But with the acquisition of Motorola Mobility on Monday, the internet company has bought its way into tens of millions of US living rooms.
Motorola Mobility is the second-largest maker of the set-top boxes that US cable operators lend out to subscribers, and Google is poised to control the manufacturing of the boxes, and critically, the software that runs inside them.
This new role for Google will put it into a complicated and potentially uncomfortable relationship with cable operators such as Comcast and Time Warner Cable.
“Google will become not only a potential competitor, but also a major vendor, and potential source of set-top box innovation,” said James Ratcliffe, Barclays Capital analyst.
When it was launched, Google TV was seen as a potential threat to cable operators. The product allowed users to access internet content through their televisions, providing them with an alternative to the expensive monthly packages cable operators provide.
Google may yet continue to pursue this strategy. To build the original Google TV, the company partnered with Logitech, another hardware manufacturer. It will now have the capacity to build a similar device in-house, which will compete with other devices that bring internet content on to televisions such as Apple TV and Roku.
Yet Google is now poised to become a big provider to the cable operators it is trying to disrupt. Motorola Mobility makes the most set-top boxes in the US, after Cisco. While cable operators are trying to develop multi-vendor strategies, they are still dependent on big suppliers such as Motorola.
The American Cable Association, representing small cable operators, issued a statement saying it would review the deal to understand the impact on the cable set-top market. ACA said the market has been a source of frustration for many small cable operators “long beholden to the Motorola-Cisco duopoly”.
ACA added that it was not clear whether the transaction would make the situation better or worse and that it “will want assurances from Google that it is committed to the cable business model and won’t use its market power to run roughshod over smaller cable operators”.
Google’s acquisition comes at a time of significant turmoil in the set-top box market, however. As cable operators move to internet-based delivery of content, they are rethinking the software that lets users browse channels and record content, and working to incorporate applications and internet content into the TV experience.
“There’s going to be a significant amount of change on the set-top box and the software that runs inside of it,” said Imran Shah, managing partner at IBB Consulting.
With its next-generation Xfinity software, Comcast is moving towards a cloud-based software system that will allow it to maintain more control over the operating systems and include applications such as Twitter and Facebook.
However, analysts and executives said Google could initiate much needed innovation in the set-top box arena, which has not developed as rapidly as other technologies.