Google vies with Apple for gaming market

The search giant may release a second generation Nexus Q.

By Benzinga Jun 28, 2013 3:36PM

Google (GOOG) is reportedly developing a game console to combat a similar device that could be released by Apple (AAPL) in the near future.

According to The Wall Street Journal, Google anticipates that Apple will add full gaming capabilities to the next version of its Apple TV set-top box.

If true, that could prove to be Apple's counter move to Microsoft (MSFT), which unveiled its do-everything-device -- Xbox One -- late last month.

Interestingly, The Wall Street Journal's sources believe that Google will also release a second-generation Nexus Q. The original Q was designed to enhance Android users' audio experience. It was manufactured in the United States and was expected to retail for $299.

Google ultimately pulled the plug on this venture after negative feedback indicated that consumers were not interested in spending that much for a media-streaming device.

Investors may now wonder: Could Google do the same to its game console?

Unlike Nexus Q, which had no close competitors to learn from, Google has more than 30 years of console mistakes and success stories to examine before releasing its first game-playing device. The company also has a few years of experience in building up Android as a smartphone alternative to traditional handheld games from Nintendo (NTDOY).

Better still, Google can learn directly from the success of the first popular Android-based console: Ouya. According to IGNGameStop (GME) and Amazon (AMZN) sold out of the new console during its first day at retail.

GameStop quickly re-stocked the device, and though it is unknown how those units are selling, the initial sell-out indicates that consumers are interested in playing Android games on a high-definition TV.

Ouya currently retails for $99 -- the same price as Apple TV. If Google can undercut those units (as Sony (SNE) did to its closest competitor when it decided to sell the PlayStation 4 for $100 less than Xbox One), Google could gain an edge.

As the new kid on the block, Google's console is still likely to have a few hurdles.

In addition to the Nexus Q, Google struggled to reinvent the TV experience with its smart television platform, known as Google TV. Developed in conjunction with Sony, Intel (INTC) and Logitech (LOGI), Google TV was expected to change the world of non-interactive entertainment. That mission prompted Intel to develop its own set-top box, as well as a brand-new service.

(Microsoft owns and publishes Top Stocks, an MSN Money site.)

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