Rumor: Google Working on Set-Top Box

Unnamed sources told the Wall Street Journal that Google is working on a set-top box. The device actually made a private appearance – just like the second-gen Nexus 10 prototype – during CES 2013 in January, and was demonstrated by Andy Rubin himself. The device was based on Android and provided Hangouts as a core feature. It also had a video camera and a motion sensor, sources said.

Sources insisted that this device was different than the 2 inch Chromecast media streaming device Google launched on Wednesday. The company's latest gadget is based on a simplified Chrome OS and relies on mobile apps and the Chrome browser for media. In an app, the user simply hits the Chromecast icon and a movie, TV show or other content is pulled from the Internet. The Chrome browser also has an extension that can be installed, or a website can incorporate Google's API.

That said, Chromecast isn't a fully-featured Chrome OS or Android system on a stick, allowing for app installation. The set-top box shown at CES 2013 had a broader set of features, sources told the paper, providing full access to Google Play. Users could stream YouTube videos, watch TV shows and supposedly even play games. Netflix and Pandora were also mentioned.

Sources said Google was supposedly set to launch the device during Google I/O back in May, but that didn't happen. Currently it's unclear if Google canned the whole project and went with the smaller Chromecast instead, or plans to launch the set-top box at a later date. The latter is more likely given Google's attempts to launch a TV streaming service in the near future. Could this be the company's own Nexus-style Google TV set-top box?

Just last week, conveniently before Chromecast made its appearance, sources told the New York Times that Google has reignited its streaming TV service plans. The company has reportedly approached media companies in recent months about streaming their traditional TV programming. In one case, Google even demonstrated the product, meaning the streaming TV plan is more than just a concept on paper.

It's quite possible the demonstration included the rumored set-top box. Google may not have revealed the device in May because its streaming TV plans aren't finalized. Indeed, it's supposedly been a battle in landing deals with content providers for not only Google, but Apple and Intel as well who are supposedly gearing up to offer their own streaming services.

Last week the New York Times indicated that Apple has learned that it needed to cooperate with content providers in order to have greater access. That meant adding HBO and ESPN apps to Apple TV which require an existing cable or satellite subscription, and likely Apple without its 30 percent cut. Time Warner Cable's TWC TV app is also coming to Apple TV in the near future.

Bloomberg recently said that Pete Distad, SVP of Marketing and Distribution at Hulu, will be hired by Apple to help Eddy Cue, Apple’s SVP of Internet Software and Services, in negotiations with media and cable companies. This move could help accelerate Apple's plan to transform the way consumers watch television as the late Steve Jobs envisioned.