The future of Internet-enabled TV is set to be influenced by Silicon Valley and they will help shape the future of TV in pretty much the same way as it came to influence the latest crop of smartphones.

As phones became much more sophisticated and added computer like capabilities, the industry strayed into the area of expertise of Valley companies. Apple developed the iPhone, Palm introduced the Pre and Google has pushed out its very successful Android operating system.

Televisions and set-top boxes are now adding similar features with powerful processors, fast video chips and more sophisticated operating systems and interfaces.

The silicon content of TVs has grown quite dramatically since the switch from analogue TVs with cathode ray tubes to flat LCD panels serving digital content.

Many are now backlit by LEDs, lighting which is made of and driven by silicon chips.

The iSuppli research firm sees internet-enabled televisions giving a major boost to silicon chipmakers, with networking semiconductors, TV systems on a chip (SoCs) and more memory needed.

It predicts a compound annual growth rate for video decoding chips, DRAM memory chips and Wi-Fi integrated circuits in internet TVs of more than 55 per cent, creating a $2bn market by 2014.

The central and graphics processors (CPUs and GPUs) of Valley companies Intel and Nvidia are likely to be used extensively to deliver video and web services.

Intel said in a meeting in May: “It was struggling to cope with demand for its latest Atom chip. It was faced with an order backlog of more than 1m units, and customers including France Telecom and Telecom Italia waiting to put the chip in their set-top boxes.”

Paul Otellini, chief executive, said then that “the biggest revolution since television went from black and white to colour was about to take place.”

Eric Kim, who was then head of its Digital Home group added: “We’re seeing the beginning of explosive growth… right now, we’re gearing up for a massive retail launch of [connected devices] this year.”

Intel is aiming its chips at the 300m TVs, 200m set top boxes and 100m Bluray players it expects to be sold a year by 2014.

However, technology companies have failed to make an impression on the TV market in the past – Intel’s own Viiv platform for media PCs in the digital living room, introduced in 2006, never made an impact.

“Before Viiv there was Microsoft’s Web TV, tech companies have all tried to develop ways to distract us from our TVs with multiple applications like email and none of them have really worked out, so I do wonder,” says Kurt Scherf, principal analyst at research firm Parks Associates.

Intel began to address the TV market seriously two years ago with its Atom 3100 processor and a partnership with Yahoo, which introduced internet widgets to the TV screen offering weather forecasts, stock quotes and social networking updates.

Now, with their more powerful 4100 processor it has moved its focus to Google TV as providing an operating system platform to drive widespread adoption of internet TV.

“Multiple manufacturers can adopt it and the requirements of supporting one-off designs reduces significantly for us,” says Wilfred Martis, general manager of retail consumer electronics at Intel.

“Manufacturers can add their own user experience on top of Google TV if they want, just like what’s happening in smartphones with Android.”

While Intel views internet TV as a major new growth market for its chips, Google sees it for its advertising potential as it brings search to the TV set through its Android operating system and Chrome browser.

At the launch of Google TV, Rishi Chandra, a senior product manager, said key metrics for the internet company Americans spend five hours a day on average in front of the TV, $70bn a year are spent on TV advertising in the US alone, while worldwide there are 4bn TV users.

Those are huge numbers even for a company thats built on big numbers. Googles earnings potential and the threat to the traditional advertising industry are very clear.

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