THE BLOG
09/30/2013 06:25 pm ET | Updated Nov 30, 2013

How the Chromecast Shows Google's Changing Priorities

According to Google at its July 24 press event, over 200 billion videos are watched online each month, making up most of the Internet traffic in North America. This vast consumption is mainly happening on computing devices -- until now, if Google has things its way. Chromecast is Google's ambitious attempt to capture TV and shift Web video content up on your big screen. For the most part, Chromecast is everything the horrific Nexus Q (Google's attempt at the living room last year) is not - a small, simple and cost-effective ($35) way to bring the online content you love on your computer (and with some caveats, tablet and/or smartphones) to your TV. It may have been just as noticeable, however, for what was missing. The event included no mention of the new Android version (now revealed to be KitKat) and the product itself focuses attention on Chrome, not Android. Nexus, Google's brand for its best of breed Android devices, was ditched in favor of Chromecast. But in order to understand the shift, we must first take a look at the beginnings of Android.

Android as defense

Many commentators forget Android started out as an effort to thwart Microsoft and not Apple. Android was born in a world that seems so long ago, particularly to folks in Redmond, when Microsoft was way ahead in smartphones and threatening to extend its dominance and zeal for exclusion into mobile. Google watched in utter panic fearing they would be shut out of the emerging mobile world just as Microsoft deftly snuffed Netscape from the browser competition. With smoke on the horizon, Google intelligently picked up Android for a paltry $50mm in 2005 and offered it free to the world as an open source mobile platform to ensure unencumbered access. In Google's own words:

"We wanted to make sure there was no central point of failure so no industry player can restrict or control the innovations of any other. That's why we created Android and made its source code open."

Even if today's landscape and players are quite different than Google imagined at the time (Microsoft appears more a threat to itself than Google), other players have seen meteoric successes and represented similar threats including the once-mighty Blackberry and the current proprietary mobile juggernaut, Apple and iOS.

Since Google's Android acquisition, Google has spent billions (including $12.5 billion to acquire Motorola) to upgrade, support and defend an OS they allow anyone to download, modify and install for free. Why? To make Android the third largest (after Windows and Facebook) platform, and the fastest to hit 1 billion users in history. While some may see fragmentation as the unavoidable consequence of this open source gambit, it is actually one of Google's greatest triumphs --creating a modern hydra virtually impossible to destroy. Further, Google circumvented fragmentation with a clever backdoor -- Google Play Services. Play Services is a collection of all of the core Google services (e.g. Maps, Authentication, etc) that Google can update outside of any OS updates. While Jelly Bean may be on only approximately 45 percent of Android phones, Google Play Services is alive, up-to-date and entirely under the control of Google on approximately 98 percent of active devices.

Chrome and the return to Google's core

Google's mission is "to organize the world's information and make it universally accessible and useful." Their company information page deliberately and repeatedly uses "the web" rather than the more general "the internet." Furthermore, Google is a horizontal player, specializing in services. In short, Google is device and system agnostic. For instance, the success of GMail or Google Docs depends on users accessing it from anywhere -- iPad, Windows 8 PC, Android phone, etc. Set in this context and knowing Android is a defensive play to keep mobile accessible, Android has always felt like an expensive necessity for Google rather than the company's passion and ultimate mission.

With the Chromecast, Google is returning to its core: the Web. Chromecast brings the Web to TV in its purest form, and it is in this sense that Google may have achieved it's masterstroke with Chromecast. Consider this: all of the content providers that had previously deemed it 'safe' to post their content on the Web, because it wasn't a threat to be viewed for free in the living room, have had that assumption yanked out from under them. Now all Web content can be TV content and there seems little way for broadcasters to block this without also blocking Web --because, anything you watch in Chrome can make it to the Chromecast.

How This Helps Google

The result of all of this is definitely positive for Google. Google is ultimately compensated via advertising revenue. And with the return to the Web and the Chromecast specifically, Google's successfully created an entirely new platform from which they can access valuable user data. By casting from Chrome to TV, Google now can learn what, how and when users are watching on the big screen. By running it through the Chrome browser on the desktop, Google increases the likelihood of users staying in Chrome for all their browsing. Highlighting Web-based video means more clicks to a URL and more indexing. Finally, by existing not only on the desktop, but also on iOS (and of course Android), it increases Google's horizontal reach, which (as mentioned earlier) is its ultimate goal and strategy.

Chromecast is another step towards breaking the iron grip current providers, like cable, have on content distribution and the living room. Ultimately, Chromecast can be a tool to position Google as a critical player in a post-TV and cable content distribution model and further strengthen its position as the king of the Web.