Google's Chromecast menaces Apple TV

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

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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.

Copyright © 2013 IDG Communications, Inc.

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