Google in Home Network Play?

By Susan Kuchinskas

January 04, 2006

Rumors have the search goliath subsidizing a home entertainment 'Cube.'

Google founder Larry Page will deliver a keynote address at the Consumer Electronics Show -- and the rumor mill says the search goliath may get into the hardware business.

But a $200, Windows-free Google PC is not in the works, according to the person who started the rumors.

The feverish speculation is based not only on Page's appearance, but on an "I, Cringely" column that appeared on PBS.org.

Robert X. Cringely is the pen name of Mark Stephens, a technology journalist, author and consultant.

According to his Nov. 24, 2005 column, "This embedded device, for which I am afraid I have no name, is a small box covered with many types of ports -- USB, RJ-45, RJ-11, analog and digital video, S-video, analog and optical sound, etc. Additional I/O that can't be seen is WiFi and Bluetooth. "This little box is Google's interface to every computer, TV, and stereo system in your home, as well as linking to home automation and climate control. The cubes are networked together wirelessly in a mesh network, so only one need be attached to your broadband modem or router."

Equity research firm Bear Stearns ran with the information in a research note dated Dec. 19. Crediting Cringely, Bear Stearns analysts summarized his thoughts, adding, "The cubes would be designed to be as 'dumb' as possible (which is the whole point of making the network the computer), and Google would probably subsidize them."

Next, Los Angeles Times staff writer Sallie Hofmeister threw gasoline on the fire with a "predictions for 2006" column quoting unnamed sources saying Google was in negotiations with Wal-Mart Stores to sell a Google PC.

"The machine would run an operating system created by Google, not Microsoft's Windows, which is one reason it would be so cheap -- perhaps as little as a couple of hundred dollars," she wrote.

Cringely told internetnews.com that his theory was based on conversations with companies other than Google.

"I know where Google has been looking and who've they've been talking to," he said.

But Cringely doubted Google would introduce the cube at CES, let alone a dirt-cheap computer. "That would be insane," he said. "They can't afford to pull down their gross margins that much. They're in the software and service business."

The Google Cube will be an embedded device that can act as a home Internet gateway, Cringely said. "But the value of it comes when you have more than one, because they'll communicate with each other wirelessly or wired."

He said the cube would solve the problem of how to get downloaded video from the PC to the television, without buying a $2,000 Windows Media Center or a $500 Macintosh Mini.

Cringely wouldn't discuss his ideas for the business model the cube would enable, saving them for a future column. But he said the Google Cube would handle digital rights management.

One potential business would be pay-per-view audio and video, with media accessed through Google search and paid for via Google Payments. Last July, Google CEO Eric Schmidt confirmed that the company was moving forward on a new payment system "to solve new problems in ecommerce."

In November, research firm Classified Intelligence dug up a patent application for Google Automat that included screen shots of a form for Google Purchases.

The firm speculated that Google Purchases could be used as the payment mechanism for consumer-to-business online transactions.

Combine Google Cube with the DRM system that Google hopes to patent, and you have a brand-new revenue stream that could be shared with media publishers.

The patent covers pay-per-view and subscription-based access to media. It also discusses swapping out ads in reproductions of print media delivered via search.

Google users could search for video, pay for it and download it. Then, Google Cube would transport it the last foot -- from PC to TV.



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