Just how much does Google Inc (NASDAQ:GOOG) hate cable companies? Enough to create a low-margin device that lets cord-cutters stream the entire Web to a TV.
Chromecast sold so fast that Google Inc (NASDAQ:GOOG) stopped offering three months of Netflix, Inc. (NASDAQ:NFLX) as a kicker. Source: Google.
Google Inc (NASDAQ:GOOG)’s Chromecast costs just $35, but the rebellion it’s kicked off is likely to be worth billions. Every major cable and satellite operator faces the prospect of having consumers cancel service because of the what the dongle can do.
Not that they need the push. A recent study from research firm GfK found that more than 19% of U.S. households use antennas to capture free over-the-air broadcasts, up from 14% in 2010. Some 60 million Americans refuse to pay for basic cable or satellite as of this writing.
A portion of this group can afford pay TV but would rather stream. These are the early adopters most likely to try Google Inc (NASDAQ:GOOG)’s Chromecast. I’d also guess they account for at least a plurality of Netflix, Inc. (NASDAQ:NFLX)‘s 30 million domestic streaming subscribers.
Meanwhile, investors are left to wonder whether Chromecast’s arrival spells trouble for Apple Inc. (NASDAQ:AAPL). The prevailing wisdom says the dongle makes Apple TV obsolete. No more would consumers need to spend spare dollars on iTunes credits when the entirety of the Internet is available for just $35. Or so the thinking goes.
Yet the true potential of disruptive technology is rarely so simple. Very often, disruptions create unintended or unforeseen consequences. Think of Tesla Motors and how proving the electric-vehicle concept has made consumers more interested in hybrid cars. Ford Motor Company (NYSE:F)‘s hybrid sales have never been higher than in recent years.
We’re too early in the process to know how Google Inc (NASDAQ:GOOG)’s Chromecast will affect Apple Inc. (NASDAQ:AAPL)’s entertainment business, but I see three reasons for Apple investors to welcome the device:
2. iTunes has a massive and engaged installed base. Meanwhile, Apple Inc. (NASDAQ:AAPL) has a huge installed base when it comes to TV and video rentals and sales. Every day, viewers download more than 800,000 TV episodes and 350,000 movies from iTunes. Other than Netflix, Inc. (NASDAQ:NFLX) and possibly YouTube, no other service has proved to be so adept at giving viewers access to top-rated content.
3. Google isn’t done adding services. While today’s Chromecast only offers access to YouTube, Chrome, Netflix, Inc. (NASDAQ:NFLX), and Google Play, the search king says there are plans to add support for other services. The simple act of supporting streaming of local content (e.g., a TV episode bought in iTunes and downloaded to an iPad) could disrupt Apple Inc. (NASDAQ:AAPL) TV while also catering to tens of millions of Apple’s best customers.
Whatever happens next, it’s a sure bet that neither Google Inc (NASDAQ:GOOG) nor Apple Inc. (NASDAQ:AAPL) is done making products that revolutionize the way we consume televised content. That’s good news for investors in both companies, and bad news for the cable and satellite incumbents they’re disrupting.
Now it’s your turn to weigh in. Will you be buying Google Inc (NASDAQ:GOOG)’s Chromecast? Do you see the device as a threat or an opportunity for Apple Inc. (NASDAQ:AAPL)?
The article 3 Reasons Google’s Chromecast Will Benefit Apple, Too originally appeared on Fool.com.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google, and Netflix at the time of publication. He was also long January 2014 Netflix $50 call options. Check out Tim’s Web home and portfolio holdings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Apple, Google, and Netflix.
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