The interesting thing about Google TV is what they are not doing and it leads to a number of unfortunate conclusions.

They are not using an encoder based chip.  And it isn’t a question of cost, in fact they are making a far more expensive device for the sole purpose of limiting what it can do.

Google TV is now basically a chrome browser overlaid on TV shows coming out of your DVR.

They could achieve this by letting you run Component or even Composite IN and actually encode your TV shows into H.264 or eventually their WebM file format.

Then they’d have a device that actually replaced DVRs and save customer $10 per month to skip the Cable DVR.

And where would these shows record?  To a PC in your network, or a thumb drive, etc  – but what’s really important is that you COULD LEGALLY record the shows to the cloud and store your favorite episodes forever.

This, by the way, would trump Sling overnight, and again bring more savings and benefits.

The same encoder based device would be cheaper and still have all the functionality that the the current Google TV promises.

If Only That Were the Plan…

Instead they are going with a radically different approach: HDMI Pass-through which doesn’t actually touch the video at all just dumps the browser layer into the frame buffer.  This is an obvious "play it safe" thing to keep everyone in Cable and Hollywood happy.

This decision means:

1) less consumers can use it.  Not everyone has HDMI TVs (or cable boxes for that matter).

2) it costs more money, when it could actually pay for itself by replacing monthly DVR fees.

many cool apps that could actually improve the DVR experience will be not happen.

What’s so galling about this play is that most web video is just Standard Definition anyway, so a low cost Network DVR would be a pretty damn cool gauntlet to throw down.

It is disappointing Google is going this route.   It will limit GTV’s adoption and give  Microsoft, Apple, Tivo, Creative, and now HP’s WebOS  the opportunity to compete in a space Google could own.

It seems to me like the "killer app" for the current set up will likely be Universal Subtitles for foreign residents.  Once a show plays on the East Coast, episodes could quickly have subtitles generated for as many languages as the market will support.

The other similar one will be some kind of "where to buy it app" – where a couple of gals can quickly make links to all the clothes the actors are wearing.

Ultimately for app developers, besides the boring stuff of putting web video on TV, using your phone as a remote, etc. it is about writing web data on top of TV shows – likely playing off DVR.

This will also mean that TV producers will have a far stronger hand to play because they of course know what is in the taped shows before the small time app developer… the effect will likely be developers working for Hollywood.  I could be wrong here, but I’d expect it.