March 18 (Bloomberg) -- Google Inc. is working to bring Web software to televisions through a partnership with Intel Corp., Sony Corp. and Logitech International SA, according to two people involved in the discussions with the companies.
The project, called Google TV, uses Intel chips, with Switzerland’s Logitech developing a keyboard that operates as a remote control, said one of the people, who declined to be named because the matter isn’t public.
Google, expanding beyond its main Internet-search business, would challenge Yahoo! Inc., TiVo Inc., Rovi Corp. and Microsoft Corp. in delivering the Internet to TVs. Intel, meanwhile, is counting on the consumer-electronics market to bolster sales of its Atom chip, which already powers netbooks. The company aims to get Atom into TVs, Blu-ray players and set-top boxes.
“It’s a sign of the legitimacy of Internet connectivity moving well beyond the PC and mobile spaces, which Google has tackled already,” said Kurt Scherf, an analyst at industry researcher Parks Associates in Dallas. “It completes the third leg of the stool.”
Google entered the mobile market in 2008 with its Android operating system, which now runs on phones from manufacturers including Motorola Inc. and HTC Corp.
Gabriel Stricker, a spokesman for Mountain View, California-based Google, declined to comment, as did Greg Belloni, a U.S.-based spokesman for Sony, and Pamela McCracken, a spokeswoman for Logitech. The New York Times reported yesterday on Google’s plans. Intel spokeswoman Mary Ninow said she was unable to confirm or deny the report.
Google rose 0.1 percent to close at $565.56 on the Nasdaq Stock Market yesterday, while Intel advanced 1.1 percent to the highest level since Sept. 2, 2008. Sony gained 0.9 percent to 3,455 yen as of 12:51 p.m. on the Tokyo Stock Exchange.
“If you have two TVs almost the same price, one with Google functionality and another with nothing, you are more inclined to go with Google,” said Sandeep Aggarwal, an analyst at Collins Stewart LLC in San Francisco. “Google has a much bigger role to play on TV now than maybe three to four years back. In addition to advertising, they can provide a lot of user utilities.”
Sony, the No. 3 TV maker after Samsung Electronics Co., and LG Electronics Inc., plans to introduce an “advanced” TV model as part of its efforts to turn around its TV business, the company said Nov. 19. The maker of Bravia sets said at the time it aims to make its TV operations profitable in the 12 months ending March 2011, the first time in seven years.
“This kind of thing won’t be unique to Sony. If Sony doesn’t do it, Apple may step forward and take the lead,” Yuji Fujimori, a Tokyo-based analyst at Barclays Capital said by phone. “It’s hard to tell how the new product will help Sony yet.”
More than one-quarter of TVs purchased by U.S. consumers in January already are capable of linking to the Web through a Wi- Fi or Ethernet connection, according to researcher ISuppli Corp.
Web-enabled TVs currently on the market allow users to watch YouTube videos, view online photo albums
, play games and stream movies from Netflix Inc. Yahoo’s TV software is installed in models from Sony, Samsung, LG Electronics and Vizio Inc.
TV Web Surfing
Rovi, formerly known as Macrovision Solutions Corp., developed a program called TotalGuide designed to let consumers navigate Web content on their TVs. The Santa Clara, California- based company will announce partnerships with manufacturers in May for products that will enter the market next year, Chief Executive Officer Alfred Amoroso said in an interview last week.
“We’re enabling the industry,” Amoroso said. He called the service an “entertainment portal for the home.”
To strike deals with TV manufacturers, Google needs to show that it can bring its advertising technology to TVs and is willing to share the revenue, Parks Associates’ Scherf said. Google has struggled to generate revenue from TV ad software that it started testing in 2007. The program included a deal to sell ads on EchoStar Communications Corp.’s satellite-TV service.
For Santa Clara-based Intel, which generates 90 percent of its revenue from PC chips, Google TV is part of a broader effort to get its processors into home electronics. At the Consumer Electronics Show in January, CEO Paul Otellini demonstrated a set-top box containing a processor from Intel. Instead of the traditional text program guide, users could see a display with multiple live programs showing at once.
Intel Executive Vice President Dadi Perlmutter said earlier this month at a conference in San Francisco that a “big announcement” would be made later this year.
“Many things are going to happen to make TVs an Internet device, a computing device,” Perlmutter said.