Why Apple Must Battle Google for the Den

Apple faces competition as Sony, Adobe, Intel and others join forces around arch-iPhone-competitor Google's Android OS.

Google opens its developer conference in San Francisco this week, setting the stage for another intensification of its battle with Apple for the future of technology.

Working with partners, including Intel, Logitech and Sony, Google will show developers how it hopes the future of television will be Android-powered.

The LA Times tells us the search giant will showcase technology that "TV viewers can use to navigate among familiar shows, YouTube videos and home videos on their sets." This is called SmartTV.

Google wants to get physical

To help it jump out of the internet and into prime position in the world's front rooms, Google will ask developers to put together apps for TVs using SmartTV and Android API's.

(Google is also expected to introduce Froyo, the latest version of its Android OS. This will include Adobe's controversial Flash 10.1 for mobile devices).

Eric Kim, head of Intel's Digital Home group, said. "Right now, we're gearing up for a massive retail launch of [connected devices] this year."

There was a time when the notion of producing applications for televisions didn't sound like a business.

That time has gone:

TV becomes a platform

"Apps distributed through set-top boxes and connected TVs will generate close to $1.9 billion by 2015," claims GigaOm Pro analyst Paul Sweeting, who estimates that paid apps will only bring in $10 million this year. This fast growth will be driven by the accelerated adoption of connected TVs.

iSuppli recently claimed 27.5% of all TVs sold in January were eventually connected to the Internet. That percentage is rising.

"The revolution we're about to go through is the biggest single change in television since it went color," Intel Chief Executive Paul Otellini said last week.

Apple already has a stake in this sector with the Apple TV. While it links the internet to current-generation TVs, it seems a little old today.

Clearly, what the Apple TV needs is an operating system and an API-based third party development environment. Apple has two choices for this: Mac OS X or the iPhone OS. I imagine the latter to be the most likely plan.

Battle for the den

Ironically, it appears the battle for the immobile -- the front room -- market is becoming another front in the savage smartphone wars.

Apple must respond to Google's front room ploy, or run the risk of tacitly ceding control of the front room to another. This seems unlikely.

Ceding the front room entertainment market would take a chunk from iTunes dominance of the digital entertainment sector.

Ashok Kumar, an analyst with Rodman & Renshaw, believes the battle for the future OS will eventually shrink to one between two parties -- Apple and Google.

Microsoft, Nokia, RIM and HP (with its Palm purchase) all represent potential challenges, but none currently match the leading-edge innovation Apple displays.

Advertising people

Ultimately it's not just about the technology, the access to entertainment, but also about the ads market.

Google sees the chance to extend its online ads dominance to the front room, even as it adopts a physical identity beyond search and AdSense by powering new families of device.

Apple has declared to stop this. The Quattro purchase and subsequent introduction of the iAds advertising system for iPhone OS-powered devices reflect the company's determination to resist.

In another twist, the new version of Android (set to appear this week) seems set to invite users to visit Flash-powered sites.

Eleventh hour for Flash?

The irony is that if the public reaction matches that of the great VHS v. Betamax wars, Apple's stance against adult entertainment may help buoy demand for Flash.

We're not convinced Adobe shareholders want to bet their hat on pornography.

In any case, Google's recent purchase of video codec developer, Global IP Solutions, suggests that company seeks its own multimedia solution in the long-term.

How do you see this game playing out?

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