Google Inc. (GOOG) penned a short blog post on the Google Chrome Blog on Monday. Consisting of 232 words and a short one-minute YouTube video, it’s easy to mistake the post for just another one of Google’s wacky initiatives.
But if there’s one thing we should know about Google by now, it’s that Google has an uncanny knack for doing great things simply. Monday’s seemingly innocuous blog post was no exception.
With just 232 words and a one-minute YouTube video, GOOG took a firm lead in the years-long “war for your living room.” As an Apple Inc (AAPL) investor, I’m a little depressed. Amazon.com (AMZN) investors should pay close attention to Google’s next move as well.
Here’s why Monday’s announcement was great news for GOOG stock and worrisome for competitors:
First, A Brief History of the Living Room Wars
Before I explain exactly what GOOG’s Google Cast for Audio is, let’s recap the major moves in the “war for your living room.”
The war has been raging for several years now; it began heating up in earnest around the time the streaming video player Netflix, Inc. (NFLX) became massively popular. With Pandora Media Inc (P) also gaining steam as a streaming music service, Blu Ray players and later Smart TVs emerged as dynamic multimedia entertainment platforms in themselves.
The term “cord cutter” was born, referring to someone who ditched cable in favor of streaming video services available with a small monthly fee and an internet connection.
Embracing this trend, AAPL released a TV set-top streaming box, Apple TV, in 2007. Every year since, the cord-cutting trend has gained momentum, and set-top boxes like Roku and Apple TV became increasingly popular.
In 2013, GOOG released its own streaming media player, the thumb-sized $35 Chromecast. AMZN arrived late to the party, and debuted its $99 Amazon Fire TV last April.
Microsoft Corporation (MSFT) and Sony Corp (ADR) (SNE) even entered the living room wars via their respective Xbox and PlayStation gaming consoles.
Fast-forward to 2015 and it’s not unusual to have some sort of cord-cutting technology in your living room. It’s no longer the exception; no longer some obscure technology that may or may not catch on. Cord cutting caught on like wildfire.
While AAPL was one of the first to see and seize the opportunity back in 2007 with its Apple TV, that first-mover advantage was squandered. InvestorPlace contributor Brad Moon writes:
“A report released by Parks Associates shows that Google’s Chromecast — not even a blip on the sales charts in 2013 — has now surpassed the Apple TV in sales. Amazon’s Fire TV has sold well enough since its April debut that it’s already threatening to catch the Apple TV.”
Not only has the cord-cutting revolution given consumers a far wider host of entertainment options, it has turned mobile devices and computers into remote controls for the TV. (Remote controls that can pull content from the internet, of course).
GOOG Cast for Audio: The War for Your Music Room?
What about Google Cast for audio? What is it exactly? And how much of a blow is it to AAPL and AMZN?
The Google Chrome Blog post explains it briefly:
“Google Cast for audio…embeds the same technology behind Chromecast into speakers, sound bars, and A/V receivers. Just like Chromecast, simply tap the cast button in your favorite music or radio app on Android, iOS, or the web, and select a Google Cast Ready speaker to get the party started.”
You might be wondering what a “Google Cast Ready” speaker is. They don’t exist yet, but they’ll be available this spring from a range of brands like Sony, LG, and HEOS by Denon. Compatibility with a growing number of apps — Pandora, iHeartRadio, NPR One, and Rdio are a few early ones — makes it a meaningful platform from the get-go.
With consumers gaining more and more uses from their Chromecast technology, Google Cast for audio is a brilliant strategic move by GOOG. Our mobile devices and computers are no longer just remote controls for our TVs; they can now control our speakers as well.
While Sony, LG, and HEOS by Denon will be some of the major brands making the Cast Ready speakers, Broadcom Corporation (BRCM), Marvell Technology Group Ltd. (MRVL), and MediaTek Inc. are some of the chip makers behind the semiconductors that make it possible.
GOOG Stock: A Step Ahead of the Rest
Sonos, the current leader in wifi-enabled consumer speakers, can’t be pleased by Google’s sudden, nonchalant move into the market. An email to Sonos requesting comment on Google Cast for audio was unanswered by the time this article was published.
As for Apple, AAPL’s lack of innovation in recent years is coming back to punish it, as GOOG takes the driver’s seat in the living room wars. AMZN, with its artificially intelligent Amazon Echo speakers, is improving its offerings but still far behind GOOG. If AMZN and AAPL don’t watch out, they could wake up in a smart home completely run by Google’s tech.
GOOG owns Nest, the “smart” thermostat and smoke detector company. Would it be such a leap of faith for Google to introduce technology that allows us to control the temperature of our homes through our mobile devices? What about tech that starts the washing machine remotely? Or locks the doors, turns the lights on, and turns the oven off?
Would we even be surprised if Google made all these things happen in the next five years?
I wouldn’t be surprised. In fact, I expect that to happen. Google is winning the war for your living room. Or maybe it’s just a battle.
The real war is for your whole home.
John Divine was long shares of GOOG stock, GOOGL stock, and AAPL stock at the time of this writing. You can follow him on Twitter @divinebizkid.
