Why Chromecast is such a big deal for Google, and a threat to Apple

Google (s GOOG) officially launched its next big idea for the living room Wednesday, and the cast of people presenting the new product dubbed Chromecast at the company’s breakfast event in San Francisco looked awfully familiar: The product was introduced by Google VP of Product Management Mario Queiroz, and demonstrated by Director of Product Management Rishi Chandra. Both executives have been heading Google TV — that other foray into the living room that didn’t fare so well. So why should things be different this time around?
Chromecast wasn’t just demoed by Queiroz and Chandra. The product has been developed by the very same people who have been working on Google TV for the past few years. But it looks like they have learned from their mistakes, and radically simplified the experience. Gone are the attempts to integrate existing pay TV offerings, recruit app developers for yet another medium and ship devices with hideous, complicated remote controls.

Like Google TV’s better-looking cousin

Instead, Chromecast is pure simplicity: Search and discovery of video content is happening on the mobile device or laptop, and all Chromecast does is stream media from the cloud. Add to that the ability to turn on your TV simply by starting video playback on your tablet, and you’ve got something that looks a bit like the anti-Google TV.
I asked a Google spokesperson about the relationship between the two products today, and got a somewhat diplomatic answer:

“Chromecast offers an alternative solution to existing non-connected HDTVs with a simple and affordable device. We believe there is ample room for both products to exist and succeed.”

In fact, there are some indications that both Google TV and Chromecast — and even Google’s quickly nixed Nexus Q device — share a lot of the same DNA. The Nexus Q first introduced the idea of an AirPlay-like playback experience for media on Google’s products, and the company has been working on bringing some of that same functionality to Google TV. The company partnered for some of the building blocks with Netflix, which is why it is no surprise that Netflix was one of the first apps to make use of Chromecast.

So what about AirPlay?

image_5Of course, the real point of comparison for Chromecast isn’t Google TV, but Apple (s AAPL) TV with its AirPlay feature. The simplicity of AirPlay is what Chromecast is modeled after, for a reason: Apple has sold some 12 million Apple TVs, making it by far the most popular dedicated video streaming device, with a 56 percent worldwide market share.
However, AirPlay also has its downsides. For one thing, it only works with Apple products, of which there are admittedly quite a few in consumers’ hands. But it’s also an aging protocol, and it doesn’t have some of the advanced multiscreen features shown off by Google Wednesday.
Chromecast synchronizes media playback across multiple devices, making it possible for you to launch the playback of a Netflix movie on your TV with the help of your phone, then turn off that phone and launch the app on your iPad to pause the movie. That’s simply not possible with AirPlay today, and it puts pressure on Apple to add more features.

In the end, it’s about the future of pay TV

The real issue however isn’t how the the Chromecast product introduced this week stacks up against Apple’s current-generation Apple TV. These products are just the first step towards a future in which both companies could be offering their own pay TV services over the internet to compete with traditional cable and satellite TV offerings.
It’s been reported that both have been in negotiations for such a service, and from a business perspective, both face the same hurdles, namely the unwillingness of programmers to give up on bundles, and the attempts by cable companies to block new competitors from entering the market. All of which could mean that it will be quite some time until either will be able to offer such a service to consumers.
But everyone in the TV industry believes that these kinds of online pay TV services are inevitable. And when they finally get ready to launch, having direct relations with consumers, and devices in their households, is going to be critical.
Until now, it looked like Apple TV was winning this race. But with Chromecast, Google has a real shot for the first time.