Logitech Falls Prey To Google’s Beta Mentality, To The Tune Of $100 Million

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Since its very first moments in the public eye, Google TV has been something of a disappointment.

Attendees of Google I/O 2010 will recall the product’s flubbed launch demo, when a series of connectivity problems prevented Google TV’s product leads from actually controlling the device, leading to some remarkably awkward pauses. They finally got it working — sort of — but the promise of an easy-to-use internet/TV hybrid was tarnished by the fact that it clearly wasn’t so easy to use.

As it turned out, the demo was only a taste of things to come. It’s long been known that Google TV hasn’t been a hit, and during an Analyst and Investor event on Wednesday Logitech announced some concrete numbers outlining just how badly its Google TV-powered device, the Logitech Revue, wound up hurting it in the end. The final tally?

Over $100 million.

As reported by The Verge, according to Guerrino De Luca, Logitech’s Chairman of the Board and Acting President and CEO, “Operational miscues in EMEA and Logitech Revue cost us well over $100M in operating profit” in the last fifteen months.

He explained that Google TV had launched with software that “was not complete and not tuned to what the consumers want at the living room let alone all the issues with content delivery that the threat of the proceeds threat that Google posed us to other content providers generated.” In other words, it simply wasn’t ready for prime-time.

Logitech’s misstep in the process was to commit to building a huge number of devices, as it expected many consumers to line up during the Christmas 2010 season to snap up the Revue at its then-$300 price point. Which obviously didn’t happen. As a result of the ordeal, De Luca said that Logitech doesn’t have any Revue followups in the works.

Now, Logitech was obviously overambitious when it came to launching the still-unproven product, but they aren’t the only manufacturer that was burned by Google’s overeager desire to ship software before it was ready. Motorola’s Xoom, which was released early this year as an iPad competitor, was one of the worst devices I’ve ever used at launch. That was partially because it was a little too bulky compared to the iPad, but it was primarily because Honeycomb — the tablet version of Android — was a buggy mess.

Google wanted to get Google TV out the door for the same reason it wanted to ship Honeycomb as soon as possible: we’re in a land rush as Apple, Google, and Microsoft race to get consumers to buy into their app and content ecosystems. From Google’s perspective, it’ll be easier to acquire new users now than it will be to get them to ‘turn sides’ several years from now, once they’ve already built up their libraries in iOS or on their Xboxes.

But in both cases — the Google TV and Honeycomb — that strategy hasn’t worked at all.

Beta labels are acceptable on free software, but when consumers are shelling out money for a device, it’s another story. And Google doesn’t just hurt its own image when it ships software prematurely on these hardware devices — oftentimes consumers will actually blame the device manufacturer for releasing a bad product.

Which means that Google is running out of strikes. It has enough cachet to be able to announce the likes of Sony, Logitech, Samsung, HTC, and Motorola as launch partners (and many of them want early access to Android). But if Google makes a habit of helping them launch bad products, those manufacturers are going to walk. And Logitech already has.

Here’s a relevant portion of the Analyst Day transcript, per Seeking Alpha.

The second mistake we made is Logitech Revue and it’s not a mistake of intention, it’s not a mistake of strategy, it’s a mistake of implementation of a gigantic nature. You are all familiar with Logitech Revue with the set top box that enables Google TV and every HDMI television. Google TV is a great concept, Google TV has the potential to completely disrupt living room, except that was not the case when we launched Logitech Revue. Logitech Revue was launched with some, I wouldn’t call it beta properly but a software that was not complete and not tuned to what the consumers want at the living room let alone all the issues with content delivery that the threat of the proceeds threat that Google posed us to other content providers generated.

To make the long story short, we thought we had invented slice bread and we just made them. We’ve made commitment we just build a lot because we expected everybody to line up for Christmas and buy these boxes $300 that was a big mistake. I would do it again, I would definitely want to have Google establish Google TV, but with a significantly smaller and more prudent approach. It’s always the case people will tend to overestimate the short-term and underestimate the long-term.

Google TV or a child of Google TV or the grandchild of Google TV will happen. The integration of television in Internet is inevitable. But the idea that it would happen overnight in Christmas 2010 was very misguided and that also caused us dearly. As you know, we dramatically reduced the price of the box to what we thought the consumers valued it and actually doing fine.