Clash of the Titans—TV: Apple vs. Google

Apple and Google – they’re a 15 minute drive away from each other in Silicon Valley, but they’re not as close as they used to be.

When Apple CEO Steve Jobs introduced the iPhone three years ago, he called Google an important partner, saying the two companies think similarly. Since then, they’ve increasingly become competitors – first in smartphones when Google announced the Android OS, then in mobile advertising, and later this year, in both music and TV.

The TV market is the latest front in this simmering rivalry. Each company has its vision for bringing Internet convenience and software simplicity to the tube – and their latest efforts will greet consumers this fall.

Apple’s approach : Apple TV, a $99 box for streaming TV and movies. This is iTunes for the HD screen – mainly a rental model for video. If it catches on, some profits would come from selling Apple TV devices, but the biggest benefit would probably come from driving new demand for Apple TV-compatible iPhones, iPods and iPads.

And then there’s Google’s very different approach: Google TV, software that TV and set-top box makers can use to access shows and even surf the web. This isn’t a rental or download store – it’s a new control panel for watching the channels you already get, and for tapping into free video on the web. (Intel’s making chips for it, Logitech’s making set-top boxes, and Sony’s making TVs with the software built in.) How would Google make money? Presumably the same way it always does: Advertising – but this time on the big screen.

Here’s what investors want to know: Who will win? Too early to tell – maybe nobody. In Apple’s favor: it’s got iTunes and 120 million iOS devices to feed its TV platform. In Google’s favor? Its search brand seems tailor-made for channel surfing, and it owns YouTube, the top online video site. This holiday season we’ll see the first skirmishes in this clash, when Apple TV and the first Google TV products go head-to-head on retail shelves.

My bottom line take: Even if there is a short-term winner here, there won’t be significant up-front revenues – like iTunes did for music and iPods, this will lay the groundwork for future hits.