Should Microsoft Just Buy Boxee And Compete With Google TV?

Did Google miss a critical opportunity? Some might say they did. Google has obviously capitalized on quite a number of market openings, paving the way for true smartphone competition with Android, putting Yahoo! and MSN on their toes with Google search, and putting Yahoo! Mail as well as Hotmail on guard with Gmail. And that's just the beginning. Google is also doing their best to bring cloud applications into the mainstream, with the Google Document suite putting serious pressure on Microsoft's Office suite.

But no one needs to tell you that Google is on top of their game. Google is even looking to revolutionize the television industry and content delivery business with Google TV.  In fact, some might say that they have their toughest climb yet with that one. They're battling against pay-TV providers (think of it as a cold war), as those who provide content over fiber and/or coax certainly don't want all of your content to simply stream in via the Internet. It still remains to be seen if Google is trying to start a new revenue stream or simply take advantage of the upside ad sales potential on TV as a medium, but one thing struck us right away when the company began to detail the Google TV platform. With Google recently snapping up AdMob and a number of other small companies, it's clear that the company isn't scared of spending money. So it had to cross their mind that Boxee is ripe for acquisition.  And given that just about everyone in the market that would be interested in Google TV is also well aware of the successes of, it would've also given Google some positive press despite some of the confusion of what they're really aiming for with Google TV.

As it stands, Google instead chose to partner with Intel, Sony, DISH Network and Logitech, all fine companies. But they lack something that Boxee has: freshness and innovation with a new face on mainstream content. Boxee's delivery method is second-to-none, and anyone viewing content heavily via a PC is probably using Boxee or has Boxee installed in order to quickly and easily access their favorite Web-based material. So why would Google leave a main competitor on the table, when this was seemingly the perfect opportunity to integrate Boxee's services in with Google TV?

Not like it matters now. Google's going at this with their own selection of partners, and there's likely no changing course. So, with Boxee still out on the market, there's an 800lb gorilla in the room that we can't ignore. It's Microsoft, and since Google passed up what seems like a great chance to really forge ahead with a service that integrates the best of Boxee with the best of Google, we're wondering if Microsoft is seeing what we're seeing. Google and Microsoft already compete in a number of areas: search, ads, smartphone operating systems, desktop operating systems, web browsers, and the list goes on. Why not add one more? Microsoft has been active in the alternative television space for years now, most recently with Windows Media Center, Media Center Extenders, their Internet TV offering in Windows Media Center and CableCARD support. Most HTPCs that don't rely on Linux/Myth, rely on Microsoft products, but the company has been unable to really exploit this market. High-end installs may rely on Windows Media Center, but average consumers can easily be daunted by the complexity of setup. And with all of those DRM loops holding things up further, it's easy to see why the standard pay-TV approach, as old as it is, still remains so very popular globally.

But alas, let us not forget about that huge install-base of Xbox Live users, who could easily and immediately benefit from a Boxee-infused content delivery system by Microsoft and tailored specifically for their own game console...

Microsoft still has a great deal of expertise in this space, and they have a long list of industry partners that would probably jump at the chance to rival Google and become "the next big thing" in TV delivery. Imagine a Microsoft-based middleware service in place of whatever is currently on your cable set-top box. So instead of using some slow, inflexible OS to attempt to record shows and manage DVR space, you'd have a sleek, 1080p Microsoft interface, one's that able to easily integrate with networked PCs and networked storage. You could easily pull together content stored locally, on a network, from your pay-TV provider, and from the Web.

And better still, there's Xbox Live and Netflix integration, two more critical items that Microsoft already has under their belt. Now, Google could easily integrate a Netflix search into their own offering since it's an open API that has also been adopted by Roku, Nintendo and Sony, but still, Microsoft has proven that it has an interface that works and people are willing to pay for. On top of that, there's Microsoft's own Xbox Video Store, yet another place where users can search for content to download. Obviously this gets a bit complex with all of these different venues to fetch media, but having Boxee as a central UI would allow those various portals to be assembled in a central, easy-to-navigate location. Of course, all of this brings up another point: Microsoft doesn't even need a set-top box vendor. They already have a perfect usable device in the Xbox 360, which retails for under $200 today. Most Media Center Extenders were around $200 at launch, so the value proposition of getting a unified pay-TV/programming set-top box and a game console for $200 is excellent. Google can't offer that, but neither can Microsoft without Boxee (or something similar).

Sounds like a plan, doesn't it? But Microsoft needs help with that last aspect, and Boxee could make Microsoft a contender today. Hardly any wait would be needed; a Boxee for Windows build is available now, as are builds for OS X and Linux. A Boxee buyout by Microsoft would allow the company to immediately integrate a best-in-class Web content delivery service with a best-in-class media center service, and the Boxee name alone would allow Microsoft to rival Google TV in a way that they could never do alone. D-Link's Boxee box could even be updated to do what Logitech's Google TV set-top box will do this Fall, and all of the connected HDTVs in the pipeline from Toshiba, Vizio, Sharp, LG and others could easily be tweaked to run a Microsoft/Boxee app that could pull down content from the Web, from your networked storage servers, from your pay-TV provider, etc.

Microsoft is in a tough position if they were to try to rival Google TV today. Google TV will be available in a few short months, and that leaves Microsoft with little to no time to develop a software alternative, rally partners and implement a solution to the market. Acquiring Boxee would accelerate the plan in a way that Microsoft may be able to have something similar out by Q4.  The most crucial aspect is that only DISH Network (of all the pay-TV carriers in America) has signed on with Google. That leaves TWC, Comcast, Cox, DirecTV, and a bunch of others ripe for the picking. It's pretty much now or never for Microsoft, and it looks like an acquisition of Boxee would be the quickest way to get on that track. We aren't certain this situation will ever play out, but could anyone argue that the whole situation of next-generation TV would be amped up a few levels in terms of excitement if indeed it went down?
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