Yahoo Sees Connected TV Installed Base Hitting 8-10 Million Units By Spring

Sales of Yahoo Connected LCD TVs will hit 5-7 million units this year en route to creating an installed base for the Internet-capable sets of 8-10 million units by March 2011, Russ Schafer, Yahoo’s senior director of product marketing for connected TV and desktop, told us.

The growth would come nearly two years after Yahoo launched its Widgets-based platform, which has drawn 10,000 registered developers and 65 Widget suppliers, Schafer said. The number of Yahoo Connected TV models grew to 70 this year from 37 in 2009 as Vizio joined LG Electronics, Samsung and Sony in shipping sets.

Toshiba and Vestel also recently signed on to add the platform to their TVs. Hisense is expected to ship Yahoo Connected-based TVs in Asia late this year. And Viewsonic is expected to delivers the WMP80 media player this fall after postponing a launch to switch suppliers of the device’s MIPS-based processor and its assembly partner, industry officials said. Aonvision was originally going to build the media player for Viewsonic, sources said. Viewsonic officials weren’t available to comment.

The new models ship as Yahoo positions itself for the arrival of Google TV and Samsung’s Smart TV developer platform. Yahoo partner Sony has shown a 40-inch Google TV-based set. Samsung sponsored a developers day in late August and is offering $500,000 in cash prizes for Smart TV applications. But Yahoo doesn’t expect Samsung’s push to affect its business with the CE manufacturer, Schafer said. Yahoo has a multiyear agreement with Samsung, which recently expanded Connected to cellphones. Samsung offered 21 Yahoo Connected TV models in 2009.

Adding Smart TV provides “differentiation” for Samsung, which was “surprised that we announced other partners at the same time as them,” Schafer said. “They wanted something unique for a period of time, but that wasn’t part of the deal,” he said. “I think they feel that Apple is putting pressure on them to have their own ecosystem. That is what is driving it. It has nothing to do with their relationship with us."

As for Sony’s fielding Google TV-based products, the two platforms have different functions, Schafer said. Google TV is designed to expand the reach of Google’s Chrome browser, and Yahoo Connected focuses on the TV experience, he said.

While Schafer conceded that some early Yahoo Connected TVs suffered “performance issues” because their processors didn’t keep pace with the platform’s demands, IC-related issues have since been resolved, Schafer said. The Yahoo Connected software starts as 60 MB file that expands to 90 MB when it opens, all stored in TV’s 2 GB or more of flash memory, Schafer said. Yahoo also released in July a standard spec for its Connected media player to “better map out all the different variations” H.264 video, he said. “It’s pretty standard, but with H.264 there are many different ways” to stream video and the media player standard is designed “to make it easy to get there on the first try,” Schafer said.

About 75 percent of Yahoo Widgets-equipped TVs are connected to the Internet, Schafer said. With them, 90 percent of users link to the Internet monthly and 45-50 percent weekly, he said. Video-on-demand -- Blockbuster on Demand and Amazon -- tends to be the most popular application, he said. But Facebook, Yahoo news and weather, the Yahoo Widgets gallery, TV Guide, Pandora and Twitter are among services used most, he said. CNBC and NBC.com will arrive on Yahoo Connected by early October, he said. But one of the platform’s early supporters, MySpace, hasn’t launched, mainly because of staff cuts, Schafer said. “They demonstrated it, but didn’t complete it unfortunately,” said.

While the expectations for Internet-capable TVs are high -- annual sales are projected to reach 87.6 million units by 2013 -- awareness of the feature remains low among consumers and store sales staff, said retailers we polled. Bjorn’s Audio Video rewired its store in San Antonio to better demonstrate the technology, President Bjorn Dybdahl said. Cowboy Maloney’s Electric City also found that additional education is needed though it has a demonstration in place, Vice President Eddie Maloney said.

"It hasn’t been a big business for us,” Maloney said. “The barrier seems to be knowledge both on the part of consumers and our sales people. They still need to understand what exactly it can do. It’s going to get more and more prevalent as the knowledge of it expands."

Internet-connected TVs could “give us a hand up if we get on the ball” and are able to discuss the technology with consumers and demonstrate it, Dybdahl said. Bjorn’s is rewiring its stores this fall, he said.