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Will Google TV Incite Apple to Innovate?

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New competition should push Apple to refocus on its forgotten child.

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What we have here is a good old-fashioned digital turf war. A Nintendo versus Sega on a grander scale. A Blu-ray versus HD-DVD of epic proportions.

At their worst, digital turf wars provoke competitors to cut any remaining ties they once had and construct walled gardens, preventing any cross-integration. The user base of either company is prevented from enjoying the benefits of both brands simultaneously. Proprietary formats emerge. Competing features are scrutinized. Lawsuits ensue.

But at their best, these tech battles can spur a tidal wave of innovation. Each side pulls together resources to deliver a product bigger, better, and faster than the rest. Interfaces improve. Bugs are fixed. Users are consulted.

The public has witnessed a mixture of both -- in large part, the former -- behind the perpetual battle between Google (GOOG) and Apple (AAPL). The battlegrounds were first extended to include web browsers, then smartphones, and soon operating systems. But now, the land war has spilled over into a territory: Home Entertainment.

Speaking with anonymous sources familiar with the matter, Nick Bilton of the New York Times reported a partnership between Google, Intel (INTC), Sony (SNE), and Logitech (LOGI) aims to deliver Google TV -- a set-top box that integrates web applications with local and streaming media. The set-top box will allegedly run on a modified version of Google's Android OS, which implies open-source development, third-party apps, and remote integration with Android devices like the Nexus One and Motorola Droid (MOT). And although not officially confirmed, insiders believe this product will work in conjunction with Google's upcoming service with Dish Network (DISH). (See Why Google Needs to Set a Web-TV Standard.)

Kurt Scherf -- industry research analyst at Parks Associates -- told Bloomberg his thoughts on device. "It's a sign of the legitimacy of Internet connectivity moving well beyond the PC and mobile spaces, which Google has tackled already," Scherf said. "It completes the third leg of the stool."

Of course, anyone who's installed Boxee and XBMC on a USB thumbdrive knows this product's sights are trained squarely on the Apple TV. Despite its dismal sales and being far from the best digital media receiver on the market -- Western Digital (WDC), Seagate (STX), and ASUSTek could arguably claim that prize -- Apple TV still has the name recognition, basic features, and flashy user interface that draw the average buyer's attention. Barring a complete misfire and an ad campaign as poor as Nexus One's, Google TV could potentially coax the buyer away from the Apple TV by following and improving upon its guidebook.

And designing a better Apple TV would hardly take any effort at all. But then again, why hasn't Apple already done it? (See How Apple Is Missing a Billion-Dollar Opportunity and In TV, Apple Leaves Trailblazing to Others.)

MG Siegler at TechCrunch expects this product could be the kick in the rear that Apple needs to move its digital media receiver beyond a "hobby" status. Siegler foresees development on the Apple TV extended to third parties -- following in the footsteps of the iPhone and iPad. However, unlike Android, Apple must contend with an SDK that allows for different TV screen resolutions -- a problem that's already plagued app developers when moving their programs to the wider iPad. But as Siegler intimates, nothing could spur Jobs and company's race to the finish quite like the phrase "Google's working on that."

In order for Apple to break the tape, though, it needs to cover a wide array of features it spectacularly ignored during Apple TV's regrettable lifespan. Enabling Netflix (NFLX) and Hulu streaming would be near the top of the list -- albeit a bit of a pipe dream. Many users have clamored for a more powerful graphics processor and a far larger capacity hard drive -- a combination that can actually handle 1080p HD. And opening up format support to include containers like .AVI and .MKV -- but given the company's current relationship with Adobe (ADBE), .FLV won't likely make it.

And the list could go on and on.

Whether Google TV actually incites Apple to refocus on its forgotten child depends on its execution and how jealous Jobs can get. For the sake of the millions of dissatisfied Apple TV users, both better exceed expectations. And if Google TV falls short, hopefully Boxee's upcoming device could spawn a bigger and better Apple TV.
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