Why Google's $35 Chromecast isn't an Apple killer...yet
The race for the living room just got a little bit more intense.
On Tuesday Google unveiled its Chromecast device, a dongle that promises to make streaming Internet video to your TV a cinch. And at about 35 bucks a pop, it's significantly cheaper than the Apple TV with its AirPlay feature, which prices at about $100.
But just because it's cheaper doesn't mean it's going to be a threat to Apple—at least not right away, analysts say.
"It doesn't make Apple suddenly shake in their boots," said James McQuivey, a principal analyst at the Forrester research firm. "If you are someone who has iPad, an iPhone or an Apple laptop, this isn't something you are going to buy. But there are hundreds of millions of people who don't, so it's a way to get people to try Google's platform and to get people who are already using the platform to like it even more."
Chromecast plugs into a television's HDMI port to connect to the Wi-Fi network. The user can then stream content from a phone, tablet or computer and watch it on a larger screen.
Unlike Apple TV, the Chromecast can be used with Android devices as well as iOS devices as long as they are accessing the streaming device via a Google platform, like the Chrome browser. Chromecast still doesn't support every service, but does support some of the key ones including YouTube, Netflix and Pandora.
"It's almost like Google said 'let's go cheaper and make it easier and make it potentially more expansive,' so that you don't have to have an Android phone or tablet to do it," McQuivey said. "Suddenly Google's ecosystem comes to benefit them in a big way. It was a smart move on their part and a recognition on their part that every attempt they have made at TV has failed."
By making it affordable, easy and open, Google is essentially aiming to make every TV a smart TV.
But it's not likely that the Chromecast will impact Apple's TV business right away because loyal Apple users simply won't find that much added value if they are already committed to Apple's ecosystem, said Carolina Milanesi, a vice president of research in Gartner's consumer devices team.
However, because the device is so cheap and there is still a large market that is not devoted to Apple's ecosystem, Google's new streaming device may be a way to attract fringe users of both platforms, Milanesi said.
"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.
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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."
One possibility is reinventing the Mac to function as a cross between of a computing device and a screen for viewing where users could share content subscriptions.
Google and Apple both have recently made big pushes to expand their content offerings and Chromecast is another means for Google to cash in on media purchases by bringing the Google Play store to the television set. But the device also helps ensure that Google's prized YouTube network makes it to the living room in a way that Google wants to deliver it, Milanesi said.
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"We have to remember YouTube is a Google platform, and with this multiscreen environment, Google wants to make sure it's part of our bigger screen experience as well, in a way they want to deliver it, Milanesi said. "Yes, you can do it through Xbox and Apple TV, but this way you are making every TV out there smart. You are accelerating that and putting YouTube on a larger screen in households that are embracing that ecosystem."
—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.