Chromecast is a Competitor’s Nightmare

Sorry for the missive that is about to follow. I have a thing for Google, and I’m writing this in a fit if adulation after reading about the new Chromecast. If I had kids, I’d imagine its akin to watching a great milestone in a child’s life, like a first step or a first word. I’m just a blubbering state of emotion.

Very short introduction: The Chromepass is a $35 USB stick that transmits video to your television, same as Apple Airplay.

Here is why I like it so much: it solves a very prevalent problem for an incredibly reasonable price. This is the how to build products, and the confirmation is in the fact that is has sold out of Amazon and Best Buy in just a few days.

Google could have gone about this in another way.  Google could have tried to undercut Apple just enough to capture some market, and then try to maintain that market through artificial barriers.
Seeing that Apple TV is $100, Google could have priced their product at $90, and then created artificial barriers to cross-sell other Google products, like say that content could only be streamed from approved apps and video on the Chrome browser. This would have been a perfectly intelligent short-term option, and one that would probably be seen as generous by most people, including the author. Apple TV would cut their price, Google would follow, Apple would release a further-reduce Apple TV lite, Roku would build their own, until finally five or six PC-to-TV streamers would compete and they’d all cost $30.

Now we get into fuzzy numbers. This process might have taken 5 or 6 years. During that time, Google would have been making higher margins on their product. They may have recouped their investment during that time. But in the end they would be one of six other competitors in the same space, fighting for the same slim margins. By starting out at such a surprising price point, they capture huge market share very quickly, and they force competitors to either put out products that aren’t ready or put out a product too late. In a market with this much potential, early mistakes could be costly. So long as Google delivers a good product experience, which they usually do, this looks like a truly shrewd move.

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