A couple of things are becoming clearer as the days roll on. It's starting to become obvious that streaming is going to be the next standard for media entertainment, stores like Barnes & Noble (NYSE:BKS) are no longer going to be needed, cable companies like Comcast (NASDAQ:CMCSA) and Time Warner (TWC) are going to face breakneck infrastructure upgrade speeds forced by tech competition - and both Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) appear to be setting up to go head to head to compete for your media integration and the OS in your home ecosystem: cars, TVs, computers, tablets, watches, glasses.
Last week, we were privy to the news that Google released Chromecast, a device that plugs into your HDMI port in your TV and allows you to stream to your TV; essentially the same thing that an Apple TV would do. The catch? Chromecast is only $35, and is much smaller and much less intrusive than Apple TV.
From Google's website:
With Chromecast, you can easily enjoy your favorite online entertainment on your HDTV-movies, TV shows, music, and more from Netflix, YouTube, Google Play, and Chrome. No more huddling around small screens and tiny speakers. Chromecast automatically updates to work with a growing number of apps
(photo compliments of digitaltrends.com)
The introduction of Chromecast to the market by Google is going to serve as a nod for tech investors as to which direction companies like Google are heading in the future. When you invest in tech companies like Google and Microsoft (NASDAQ:MSFT) in the future, you're going to be investing in companies that are competing to feature their operating systems not only in your computers, but in your lifestyle.
This launch is coming just a couple of months after Microsoft decided to "branch out" on its Xbox concept, releasing the Xbox One. The Xbox One, for better or worse, has a major emphasis on not just video gaming; but an entire multimedia experience based around it. It's likely that Sony's (NYSE:SNE) PlayStation 4 is going to continue down this road when it's released later this year.
The most important thing here is the fact that this is just another gesture pointing out the importance of media integration and how, eventually, everything in your house is going to be integrated into one unit. We have Microsoft, Sony, Google, Apple, Netflix (NASDAQ:NFLX), and Hulu (NYSE:DIS) all competing for your media integration needs. The best part? This is just a small nod in the direction that tech and electronics are heading.
So, it looks like Google's decided to go the "Samsung" (OTC:SSNHY) route with their TV set device in order to compete with Apple. This is the same route that led Samsung to competing effectively with Apple in the smartphone category. It's also the way Microsoft competed with Apple back in the 1990's. Hell, it might be the only way to compete with Apple: rush to market with a cheaper product, then once everyone is tied in and using it, worry about making upgrades to it. In other words, make something that you know isn't going to be received well by the people that have already pledged their allegiance to Apple, but rather a product that will appeal to people that:
- are on the "PC" side of the Mac/PC war
- can't afford Apple products
It's likely that this isn't going to make a huge difference to Apple right now - especially backed by their base of loyal followers, but Apple (and its investors) should hereby consider themselves on notice: Google is coming for your customers, and wants in on the OS war for your life. Microsoft and Sony probably aren't far behind, either.
This serves as another consistent reminder that Google is set to move into the "ecosystem" of lifestyle electronics, venturing way out from simply computers to different products. This goes head-to-head with what Apple is trying to do; essentially the same thing. We're going to see these two titans of the tech industry go at each other for many years to come.
Again, this product is now one in a growing line that speaks to exactly where Google wants to go in terms of their future innovation. Google is in the late stages of Google Glass, with their super-fast internet service (Fiber) still churning away in its select towns in the background. You know that old saying : if it walks like a duck and talks like a duck, it's probably Google trying to commandeer all of the electronic devices you could potentially use during a normal day.
"This is more about the ecosystem play, giving people access to Google's platform at a throw away price," Milanesi said. "It's the lowest cost part that people can buy that gets them into the Google ecosystem, and long term that's where I see the danger being. The question is going to be how else is Apple going to attack the living room."
While there is a lot of speculation that Apple will roll out a television set, Mianesi said she envisions something slightly different.
It doesn't make sense for Apple to roll out a television set in the traditional sense because of how large the TV market is, but the company will reinvent the way consumers think about television with some sort of new screen experience, she said.
"I think there will be a phase that will come where Apple's TV box will mutate into something else," she said. "I think we are expecting more to come from Apple that will take that TV business to a different level-some hardware related to a screen that is more of an entertainment device."
Along those same lines, Apple's iOS is clearly heading for the "ecosystem" play as well. Analysts and bloggers (including myself) have been long contending that something aside from the Apple TV is going to be coming out for media integration. Well, Tim, this would be a great idea to let that rip.
Aside from the coming iWatch, Apple recently said at the WWDC that they're going to be making a major push to get iOS in cars, as well. Soon, everything's going to have an operating system - things like your coffee maker and home air conditioner system will be no exception.
I'd Bet on Apple From the Get-Go
What used to be OS wars for your computer are now turning into OS wars for your life.
DigitalTrends.com contends there's no winner in the streaming TV area yet, and I agree, for the time being:
There's no "winner" here. These are two different devices for two different customers. For those who let only iOS and OS X products cross the threshold of their home, the Apple TV is the way to go. You're okay with spending a little bit more for an Apple product, so you'll likely be okay with paying a little more for an Apple TV. If you're on a tight budget, the Chromecast is the ticket. Costing about what you'd pay for a tank of gas, the Chromecast won't break the bank. Plus, if you live in a world of cross-platform devices, you'll be glad to have an easy way to stream content from your devices to your TV without having to invest in an expensive set-top box or smart TV.
This is an emerging sub-market in technology, and it's only just getting started. However, you need to know that these OS wars are going to affect your future tech investments. This area is going to make some companies (and their stockholders) a good amount of money, if they can think forward - beyond the PC.
It's likely that the "main event", however, is going to be Apple versus Google going forward. Are we at a point yet where we can start to place bets? If I had to, I'd be placing my chips with Apple for a couple of reasons:
- more market share to capture
- much like BMWs and Audis, Apple products aren't everywhere; they're widely regarded as the "premium" solution - again, denoted by the way companies like Google and Microsoft need to undercut price to be effective competitors
These major media/lifestyle integrations are starting to take a more prominent front seat for these companies. I recently started to write about it in another article, titled "Apple Could Destroy Xbox One with an iTV".
Apple is the company that we think about when we think about media integration. Apple started with this concept back in the early 2000's when it introduced iLife, a package of 4 media programs that all worked together with each other to make media the main focus of the user experience. While stating my case for Apple to release a TV in a previous article, I noted:
This is one reason I'm convinced that Apple is going to put out a TV. When they started down the "i" path (iTools, iMac, iPad, iLife), the ultimate goal was 100% media integration with computing. This is why your iPhoto works seamlessly with iMovie and iTunes, and they all work with your Apple TV. Soon, everything will be based from one master controller, which is going to make ordering channels, programming and movies on demand extremely easy.
I'd also contend that Apple is in the best position to begin a major macro roll out of something this large: they have a cash position in the hundreds of billions, they've only now just taken on debt, and they're arguably the most fundamentally sound company on the face of the planet. Couple that with their dividend, and they'd be the company that I'm invested in right now, if I had to bet on this emerging battle.
The OS war for your life has just begun, it's going to be great to watch it unfurl - especially because we're going to reap the benefits of tons of cool new gadgets in our lives. As always, I wish the best of luck to all investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.