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Source: Flickr user redjar

Last week, when Logitech slashed the price of its Revue to $99, it gave me a sense of déjà vu. I thought back to the early 2000s, when another category of new devices, called digital media adapters, or DMAs, were similarly struggling. The idea behind DMAs was that they could be a bridge between the home network to your TV, your stereo or other media playback devices. Ultimately these devices failed as a category, mainly because they were difficult to use and felt like “one box too many,” meaning they were never integrated enough from a software or hardware perspective to make the consumer forget they were there.

Sound familar?

That’s kind of like what we’re seeing today with the Logitech Revue, which, while ambitious in scope, felt rushed and like “one box too many.”

In some ways, this result is the fault of Google’s aggressive approach to the living room. Apple TV and Roku simply want to be one of many user interfaces to choose from for your TV watching (this simplicity and lesser scope is the reason for these devices’ success). But Google has tried to make Google TV the UI for all of your TV entertainment, including pay TV, VOD and, well, everything.

Now, don’t get me wrong, I’m actually a fan of this aggressive approach. But going big means that you’ve got to get it right, and the first iteration of Google TV wasn’t quite right.

Part of the problem is that the navigation and physical interfaces are very clunky. If you’re going to try and blend pay TV, over-the-top and apps into a one-remote, one-interface experience, you ultimately need to integrate the experiences and, eventually, the boxes themselves. Google is moving in this direction and is working with TV OEMS as well as with other parts of the TV ecosystem, but it wasn’t very evident from this first go-around.

Why is integration of the entire TV experience important? Because long term, consumers will have a hard time telling which source their content comes from, and they will want all of it integrated and simplified. Less interfaces, less inputs, less remotes: one guide and one device.

But do I think that external boxes will go away? No. In fact, for the next three to four years, there will be a growing market for devices like Apple TV, Roku and perhaps a revised Revue/Google TV. This is particularly likely since so many consumers have already purchased a nice HDTV, many of which do not have a network connection. But over time, as consumers upgrade their TVs, they will want to move toward integrated devices and experiences rather than a collection of sidecar boxes and a pile of remotes.

That’s why, ultimately, I see strong growth on the connected TV front, which I forecast to grow from 65 million shipped in 2011 to 131 million in 2016.  More of these TVs will come loaded with powerful software, like Google TV, that will provide a comprehensive UI to search, navigate and ultimately socialize with a person’s social graph. They’ll also start to replace the collection of “adapter” boxes and perhaps even the set-top itself, as at some point internal processors will become more powerful.

Connected TV forecast, 2008–2016

Unfortunately for Logitech, it got caught up in Google’s first iteration of Google TV. And unlike other early partners in Google experiments (think HTC with its first Android phones), Logitech got hit hard, since there wasn’t a quick move to a newer, sexier device for a market that has potentially hundreds of millions of ready customers (as is the case with smartphones). Given the severity of the misstep (the company CEO was fired in part due to the Google TV mistakes), I think we’ll likely see Logitech exit this market eventually.

As for Google, I believe the company will find success by delivering more-integrated experiences on connected TVs and even carrier set-tops.  The question, however, is whether it will find more partners like Logitech willing to risk its company on the path to success.

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