With Chromecast, Google reveals Chrome as its strategic big gun

With Chromecast, Google reveals Chrome as its strategic big gun
The browser is behind Google's play for user data from as many screens as possible

Chrome is Google and Google is Chrome.

The Chrome browser is Google's most potent strategic weapon, a former Microsoft program manager said last week.

"Chrome is the focus at Google; Android is an afterthought," asserted Ben Thompson, who writes on his Stratechery blog. Thompson, who left Microsoft earlier this month, has quickly made a name for himself with insights into the technology market, in particular Microsoft, Apple and Google, ranging from Microsoft's massive reorganization to the possible role for a larger, 13-in. iPad.

"Chrome shouldn't be thought of as a Web browser," Thompson wrote. "Rather, it's an optimized bi-directional delivery vehicle: the best experience with Google services for users, and maximum user data for Google. And it runs everywhere. This is why Google has been investing millions of dollars in building the Chrome brand."

Thompson's latest post was reacting to the debut of Chromecast, the $35 stream-to-TV device Google introduced last week. Chromecast, said Google, is powered by a simplified version of Chrome OS. (Although GTVHacker.com claimed Chromecast is "more Android than ChromeOS.")

"As a horizontal company, Google wants to be on every screen, and their vehicle to accomplish that across verticals, both from a technical and brand perspective, is Chrome," Thompson added. By "verticals," Thompson meant "devices."

It's hard to argue with Thompson.

Google has been expending significant resources to push Chrome into as many corners as possible.

Not only is Chrome (the browser) available for all major desktop and mobile platforms -- from Windows and OS X to Android and iOS -- the major features of Chrome OS are being added to the browser, including packaged, nee "native," Web apps and the ability to view and edit Microsoft Office documents.

The goal? From Thompson's viewpoint, control of a "multi-screen world."

Others have had similar thoughts.

"It looks like Google is defining the Chrome platform as what I'd call 'Web Platform Plus,' and intends for Chrome OS and the Chrome browser to be a 'platform on a platform' on any device it is permitted to run on," said IDC analyst Al Hilwa in a May interview, months before Chromecast.

By defining that "platform on a platform" -- Chrome on Windows, on Android, on iOS, on OS X, on the television -- Google is trying to turn as many devices and screens as possible into ones locked into the company's ecosystem, keep users loyal to that same ecosystem of sites, service and apps, and entice others to join them.

The ultimate prize is more revenue, which Google generates almost exclusively from online advertising. All Google does, argued Charles Golvin, an analyst with Forrester, is driven by its search for more, and more expensive, advertising.

"Google is advertising driven. All its efforts, including Chromecast, are not just about selling more ads, they're about aggregating data about the customer to make those ads more valuable," said Golvin in an interview last week. "The more you can target the ads, the more attractive they are to advertisers, and the more Google's real customers -- advertisers -- are willing to pay."

Thompson dubbed that "maximum user data," but his meaning was the same as Golvin's.

Chromecast is Google's newest blatant example of a Chrome-centric strategy. Not only does it carry the "Chrome" moniker, important in itself as an expression of brand identity, but it heavily leans on the browser for functionality.

Only a handful of dedicated apps support Chromecast out the gate: Google's own YouTube, Google Play Movies & TV and Google Play Music; and the only third-party entry, Netflix. The rest of the lifting is done by Chrome, the browser.

Content on any Chrome tab active on a device within range of a Chromecast-equipped TV can be displayed on the television. During installation on a Windows or OS X personal computer, Chromecast automatically adds the Google Cast add-on to the browser; it can be downloaded separately from the Chrome Web Store, but again, requires Chromecast.

Not only does Chrome's ability to cast ease the early adopter pain of too-few Chromecast-supporting apps, but it circumvents the limitations of accumulating data when third-party apps are used to display content on a television.

Instead, the normal data collection rules -- as Google spells them out in its privacy policy for Chrome -- apply.

Specifically, Google knows what you watch, at least in a general way.

"For Chromecast users, Google may collect system activity, crashes, and other details about how you use Chromecast, including use of apps and domains (but not full URLs) accessed by Chromecast," Google's privacy policy states.

Maximum user data, as Thompson put it.

In fact, argued Thompson, Google has bet its strategic coin on Chrome, not Android, the mobile operating system also launched in 2008, the same year as Chrome. Thompson noted that Android was largely absent from last week's unveiling of Chromecast -- even to the point, if GTVHacker.com was correct, fudging the code foundation of the device's firmware -- as it was earlier this year at Google's I/O developer conference.

That's no coincidence, Thompson said.

"Android ... enables several of those verticals [devices], and keeps Apple honest in phones especially," said Thompson. "However, by virtue of the hardware world it lives in, it's not the best vehicle for reaching all users, and Google is fine with that. Now that Android is good enough on phones, there simply isn't any point in investing in it as heavily as before."

Put plainly, Chrome is Google ... and Google is Chrome.

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With reorg, Microsoft bets big on home-grown hardware

New group dedicated to devices means a head-to-head battle with OEMs, analysts argue

Microsoft's reorganization is the biggest shot yet fired against the company's core partners, the computer makers who have made the software developer a technology giant, analysts said today.

"There were clear lines of demarcation where Microsoft's efforts ended and OEMs' started, but this could challenge OEMs down the road," said Patrick Moorhead, principal analyst at Moor Insights & Strategy, in an interview Thursday.

Moorhead was referring to the corporate reshuffling announced earlier today by CEO Steve Ballmer -- specifically the creation of a hardware group within the company.

The Devices and Studios Engineering Group will be led by Julie Larson-Green, who will oversee all hardware development, from the Xbox and Surface to mice and keyboards. In his memo to employees today, Ballmer said that she would also assume responsibility for the "supply chain, from the smallest to the largest devices we build."

Larson-Green, a former lieutenant to Steven Sinofsky, who until he was ousted last fall ran the Windows division, was most recently head of Windows engineering, and shared responsibilities for desktop and tablet OS team with Tami Reller, former Windows CFO.

Because Devices and Studio Engineering will be one of just four engineering groups -- the others focus on operating systems, applications and services, and cloud and enterprise -- and because Microsoft has never had a unit at that level dedicated to devices, Moorhead interpreted the reorg results as a major change in direction for Redmond.

"This is the first time they have ever had a division called 'Devices,'" said Moorhead. "To me, that means Microsoft is very, very serious about hardware, as serious as Apple is about tablets."

Unless Larson-Green's fiefdom ends up smaller than the weight the new structure seems to assign it, and unless Ballmer's mantra of "devices and services" is a smokescreen, the company must expand its hardware offerings.

Moorhead certainly expects that to happen. "One of the first things they'll do is a Surface notebook," Moorhead predicted. "Second, they'll do a smart watch or some kind of wearable [computer]."

And because turning a profit on hardware, PCs included, requires a large-scale commitment -- necessary to purchase components at reasonable prices -- Microsoft will, in effect, become a direct competitor with its OEM (original equipment manufacturing) partners, the Dells, the HPs, the Lenovos of the world.

"PCs require scale, and are just not suitable to niches," said Moorhead, a former executive with AMD, the chip-making rival to Intel. "They were acting this way before [with the Surface tablets] but this is whole new level. This is such a big change that I'd argue it's a reinvention of Microsoft."

Another analyst agreed.
"Microsoft doesn't have an incredible track record on hardware," said Bob O'Donnell of IDC. "Surface isn't exactly tearing up the charts. For [hardware] to become a core focus, I just don't know, it seems odd to me. But they will expand their hardware. I expect a Surface phone, more Surface tablets, including a smaller tablet, and more.

"Microsoft has taken shots at OEMs before," O'Donnell added, referring to the surprise debut a year ago of the Surface tablet line. "But the [Devices and Studio Engineering] group reinforces that. This is another shot at the OEMs, no question."

But two other analysts rejected that line of reasoning, believing that, corporate revamping aside, Microsoft is not about to alienate its OEMs, which produce the overwhelming bulk of all PCs, tablets and smartphones, and those device categories' countless accessories and peripherals.

"The fact that Microsoft has a 'devices' group says nothing about its relationships with OEMs, whether [Microsoft] will be more competitive with OEMs," said Rob Helm, an analyst with Directions on Microsoft, a research firm that focuses exclusively on tracking its target's every move.

David Cearley, Gartner's lead Microsoft analyst, echoed Helm, but in even stronger terms. "They've been very clear that they're committed to targeting specific areas, high-value niches only, that can demonstrate the capabilities of their operating systems," said Cearley, essentially repeating the positioning Microsoft took last year when it raised a ruckus among OEMs by moving into hardware.

"But Microsoft competing head-to-head with OEMs? No," Cearley said. "They'll expand Surface with different screen sizes and smaller tablets, but the market for those devices will still be targeted.

"Microsoft still needs to work with a broad set of OEMs" to have scores, or even hundreds, of different device designs on the market, Cearley continued. That breadth of choice has been a decades-long selling point Microsoft has relied on to tout its software, and it's not about to walk away from that philosophy.

But the recasting of the company -- the recounting, over and over, that Microsoft is now "devices" as well as "services" -- was too dramatic for Moorhead to believe it wouldn't change Microsoft and how it interacts with OEM partners.

"They're going after an end-to-end experience," said Moorhead. "They started off and spent most of their lives in a time where OS was king. But when OSes are free, as it relates to mobile, for example, things have to change."

O'Donnell concurred with Moorhead that the new Devices and Studios group would be much more aggressive in competing with OEMs. But he questioned whether Microsoft would, in effect, pull off an "Apple" by mimicking its Cupertino, Calif. rival, which controls much more of its ecosystem, building all its own hardware as well as crafting its own operating systems.

"Is Microsoft trying to become Apple?" O'Donnell asked. "One can certainly presume that, in fact, some of these moves are an attempt to turn them into an Apple-like company. But the key differentiator is that Microsoft has nowhere near the hardware position of Apple."

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