Google's Chromecast menaces Apple TV

$35 gizmo may hamper Apple's 'hobby' business in the living room, say analysts

Google's new stream-to-TV Chromecast threatens rival Apple's efforts to gain a foothold in the living room, analysts said Wednesday.

But the $35 Chromecast hardware dongle -- and the move to integrate it with mobile apps and Google's Chrome browser -- is far from a mortal blow to Cupertino.

"I think this begins to threaten the Apple TV," said Ezra Gottheil, an analyst with Technology Business Research who covers both Google and Apple. "It goes right to the sweet spot, video that I can watch on a very hi-res screen. And it's looks like a nice product at a very reasonable price."

Charles Golvin of Forrester Research had somewhat the same reaction -- Chromecast menaces Apple TV -- but cautioned against taking that too far.

"Any of Apple's competitors, if they come up with a more elegant solution for that experience [of getting content onto your TV], is a threat to Apple," said Golvin. "Still, this is at such an early stage, it's not like this knocks Apple out of the game. This just raises the bar."

On Wednesday, Google introduced Chromecast at a California press briefing, touting the device and technology as a way to push content from the cloud to a television set without requiring yet another box with its snake's nest of cables. Initially, that content will be limited to video from Google Play Movies & TV, Netflix and YouTube; audio from Google Play Music; and whatever is displayed on a Chrome browser's tab.

Android tablets and smartphones, iPhones and iPads, as well as any device running the Chrome browser, serve as remote controls. Chromecast does not mirror locally-stored content to the TV, as does AirPlay and Apple TV, Apple's pairing. Instead, everything is drawn from online services or the Web, then shot straight to the TV via the Wi-Fi-enabled dongle without the bits hopping through another device.

The Chromecast dongle, which plugs into a TV's HDMI port, costs $35. It went on sale Wednesday at Amazon.com, BestBuy.com and Google Play, and will reach Best Buy store shelves Sunday. Initial supplies quickly evaporated: Today, Amazon said the device was out of stock and Google Play listed it as shipping in three to four weeks. Only Best Buy showed Chromecast as available.

Chromecast isn't Google's first attempt to get into the living room. It was preceded by the much more ambitious, but now nearly moribund Google TV of 2010, and last year's aborted Nexus Q.

But analysts liked what they saw in the newest effort.

"Google is saying, 'Hey, you already have a device in your hands to control the experience,'" said Golvin. "Now they've gone a step further [than Nexus Q] and shrunken down the hardware so that it's basically invisible. There are tons of people with big-screen TVs, who have portable devices and broadband Wi-Fi in the house. Marrying these things in a natural and simple way to get content on that big-screen TV -- I think it moves the needle."

Apple TV, meanwhile, has not climbed out of the "hobby" basement that co-founder and former CEO Steve Jobs put it in, though Apple has sold millions of the devices. In May, CEO Tim Cook claimed his company had sold 13 million Apple TVs, about half of them in the past year.

Even so, Apple TV leads the video-streaming device market. According to market research firm Frost & Sullivan, the $99 Apple TV locked up 56% of 2012's sales, followed by Roku, which sells for between $50 and $100, with 22%.

Chromecast isn't a threat to Apple TV, even a small one, countered Dan Rayburn, a principal analyst at Frost & Sullivan. "It's not competitive with Apple TV because it's not a standalone," said Rayburn. "You need a phone or a tablet or the Chrome browser, and apps that implement [Chromecast]. And it will take time for apps to do that."

In comparison, Apple TV has a massive content roster. And its dedicated design is a plus, said Rayburn, because the box meshes with Apple's huge ecosystem. For that reason Apple TV plays to customers who have already heavily invested in Apple. Chromecast won't matter to Apple's target audience.

"I don't deny that Chromecast is a cool product," said Rayburn. "The coolest part is its price. Google will sell a boatload for that reason. And it does matter, because it's cool, because it's cheap. But ultimately, it will only confuse consumers. They're going to wonder, 'Why doesn't it play MLB.TV [Major League Baseball's subscription service]? I have an MLB account.'"

None of the analysts saw Chromecast as a breakthrough that will propel Google into first place in consumers' minds or in their living rooms. As Golvin said, it was just one small step toward the final goal everyone is after.

"Every one of those steps make a difference," said Golvin. "But the end is building it into the TV."

Rayburn didn't disagree, but pointed out that technology companies don't have as much to say about how that goal will be reached as many think. "They're not the ones who control and own this market," said Rayburn. Cable channels, broadcast networks and Hollywood do. And because they've not settled on a strategy, the field is so fractured it's impossible to pick a winner or spot the losers.

"None of these companies play together," Rayburn said, citing Apple, Google and Microsoft, among others. "There's different technology, there are no standards. It's confusing to consumers."

The fragmentation is even rooted in the strategic reasons why companies like Apple and Google are trying to figure out the living room.

Apple's historic strategy is to sell hardware, evidenced by Apple TV, although the revenue it now books from content sales -- music, video and apps -- runs around $4 billion each quarter.

Google thinks differently.

"Google is advertising driven. All its efforts, including Chromecast, are not just about selling more ads, they're about aggregating data about the customer to make those ads more valuable," said Golvin, pointing out that with Chromecast, Google gains insight into consumers' viewing habits. "The more you can target the ads, the more attractive they are to advertisers, and the more Google's real customers -- advertisers -- are willing to pay."

The Chromecast price point reflects that strategy. While Google maintained that it would profit from the $35 dongle, there's a suspicion by some that it's using a loss leader to further its strategic goal of accumulating more data to deliver advertising.

That may pressure Apple to repeat 2010's 57% price cut of Apple TV.

And so the battle for the TV will continue, the experts said. "Chromecast provides an alternative to what Apple offers," said Golvin. "But this is a battleground without a great deal of traction by anyone."

This article, Google's Chromecast menaces Apple TV, was originally published at Computerworld.com.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Read more about personal technology in Computerworld's Personal Technology Topic Center.

This story, "Google's Chromecast menaces Apple TV" was originally published by Computerworld.

Top 10 Hot Internet of Things Startups
Join the discussion
Be the first to comment on this article. Our Commenting Policies