In many of my past articles about Google TV, I've suggested that one of the best ways for Google to make its set top boxes popular is to promote them as some sort of “mini-consoles”, that are powered by the latest and best ARM chips, while costing only $99. Google should not try to compete directly with the PS3 or the Xbox 360, but to “disrupt” the market, by completely changing the rules of the game.
All Google would need to do to make this happen is employ the same strategy they've used in the smartphone market, which enabled Android to beat the iPhone in market share. Simply get all TV and set top box makers to put the Google TV on their devices, and basically flood the market with these $99 set top boxes/mini-consoles and TV sets that would run the Google TV software.
Of course, to make a console platform, you also need games, and that would be part two of the plan. Google needs to actively go after game developers, especially the big ones like EA, Ubisoft, and so on, and partner with them to port their Android games to Google TV (which should be really easy), but also to port their “console” games to Android/Google TV. ARM chips are already getting dangerously close in graphics performance to current-gen consoles, and, next year, they will probably even surpass consoles.
Unfortunately, from what I've seen so far, Google hasn't really shown any intention of doing that. Yes, they've added controller support to Android 4.0 and the latest Google TV software. But it seems like they did it because they thought controller support would be a “nice to have” feature in Android, rather than aggressively pursuing gaming as a pivotal part of their strategy for Google TV. You can also see OnLive and Gaikai cloud gaming services on new Google TVs, but again, it doesn't seem like a unified main strategy.
While Google sits idle, there are other companies that will try to pursue this strategy, although they will probably have far less success than Google would if they did it themselves. One such company is Ouya, which intends to release a $99 Android-based console with an open developer ecosystem and, surprisingly plans to make all games free.
The console will be connected to a TV, and will allow users to build and self-publish their own games, so others can play them as well. There will be dev kits included with the console, which will be “built to be hacked”. You can use it as a media streaming box, or you can program your own game controllers if you want. There aren't other details about the hardware so far, but since you're getting all this for $99, I wouldn't expect something like a quad-core ARM processor. Still, it sounds like a promising start, if they can get momentum with developers and customers.
The team behind the project includes IGN's Julie Uhrman, who is the project's founder and CEO, while ex-Microsoft vice president Ed Fries and One Laptop Per Child designer Yves Behar participate as advisers. Muffi Ghadiali, who helped ship Amazon's Kindle Fire is also on board. The team seems to be made of star employees, but while that doesn't guarantee the startup's success, it certainly makes it interesting to follow.