What does Google TV do for Sony?


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Quick, which company is bigger: Google or Sony?

If you answered Google, you’d be wrong -- at least when it comes to sales. Google pulled in $23.7 billion in revenue last year compared with Sony’s $77.6 billion.

But if one judges it by the amount of press generated by Thursday’s announcement that Sony would be the first to come out with a television set incorporating the Google TV platform, the reverse is true. News hits generated by a (Google) search for ‘Sony Internet TV’ yielded 2,190 stories in the last 24 hours, whereas ‘Google TV’ came up with 5,300 results.


So what does the Japanese consumer electronics giant get from the alliance, if not press? As it turns out, potentially quite a bit, said Jonathan Gaw and Danielle Levitas, two technology analysts with IDC. They boil it down to three crucial benefits:

1. Sony gets to set itself apart from the pack, for a short time. Television makers have been waging a battle against commodity pricing, particularly from savvy upstarts such as Vizio. While this has been a great boon to shoppers, it’s annihilated company profits, especially for premium players such as Sony. Being first to have Google TV gives Sony a chance to differentiate its TV sets with snazzy apps, bite-sized software and services that can be delivered to the TV straight from the Internet without a computer. But all TV makers will eventually have access to Google TV, Levitas said, so the window of opportunity will be brief.

2. Sony potentially gets access to a new revenue stream -- search referrals. While Google and Sony would not talk about what, if any, revenue-sharing arrangements they’ve agreed to, Gaw thinks Google will do what it typically does with partners: share the wealth.

‘That’s what Google does with everyone,” he said. “If you send them a search, they give you a cut of the revenue. The consumer electronics guys have never had that before.”

3. Sony gets a software platform. Apart from video games, Sony has gotten a steady diet of criticism over the years for its software. Instead of insisting on doing all of its own software, Sony is starting to call in outside partners. Google is the most high-profile partner, but not the first. Earlier this year, Sony worked with a small software company, Chumby Industries, to develop its Dash device.

‘Software plays an increasingly important role in devices, but it’s not Sony’s forte,’ Gaw said. ‘So they partner with whoever they can to give them a leg up.’

For now, that leg up is coming from Google.

-- Alex Pham