For Apple Inc. (NASDAQ:AAPL), Apple TV has never been a meaningful source of revenue. However, a persistent rumor suggests that Apple Inc. (NASDAQ:AAPL) will release a full-featured “smart television” on par with current products from Sony and Samsung to erect a third pillar of growth. More far-fetched rumors claim that the Apple TV will not only be a full-featured smart television, but will come with second-screen tablets and a ring-shaped remote control.
With the arrival of Chromecast, a full-featured Apple Inc. (NASDAQ:AAPL) smart television seems unlikely, since it will be a substantially lower-margin business than its current set-top box. Sony and its Japanese industry peers have spent years dragged down by the ailing television business, which doesn’t make it a lucrative market to dive headfirst into.
Don’t count Microsoft Corporation (NASDAQ:MSFT) out yet
Although set-top streaming boxes are an interesting niche market, investors should also pay attention to Microsoft Corporation (NASDAQ:MSFT)’s Xbox One, the company’s $500 game console that the company hopes will revolutionize living room entertainment by combining console gaming, media streaming and personal computing into a single package.
The Xbox One is the antithesis of Chromecast, a monstrous Goliath towering over Google Inc (NASDAQ:GOOG)’s David. The Xbox One has access to more content than Chromecast and Apple TV, and has nearly the same amount of content as Roku, as well as YouTube access. However, the Xbox One notably lacks mirroring technology.
Foolish final thought
It’s important to remember that the Chromecast, Apple TV, and Xbox One aren’t the respective core businesses of Google Inc (NASDAQ:GOOG), Apple and Microsoft. Rather, they represent attempts to force users to become dependent on their ecosystems, which can be unified through mobile devices, personal computers, and television sets.
Unifying these ecosystems will generate higher sales of other related products, and in this respect Google Inc (NASDAQ:GOOG) has a strong lead thanks to our reliance on its ecosystem. Apple Inc. (NASDAQ:AAPL) and Microsoft, on the other hand, are still struggling to build that ecosystem to retain users. If Google Inc (NASDAQ:GOOG) claims a substantial part of the streaming set-top market with Chromecast, then it will win a key battle in expanding its defensive moat against Apple Inc. (NASDAQ:AAPL) and Microsoft — and that’s why this little $35 device matters.
The article This Little $35 Device Could Change the Smart TV Market originally appeared on Fool.com and is written by Leo Sun.
Leo Sun owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
