What does it stream?
The Nexus Q can only stream from three sources: Google Play Music, Google Play TV & Movies, and YouTube. To use any of the services, simply open one of the aforementioned apps on your Android device and press the icon that looks like a play button with sound waves coming out of it. It feels a lot like AirPlay, except it only works with three apps.
Google Play Music is the most natural fit for the Nexus Q, given its built-in amp and focus on audio. You can browse all the music you've uploaded to your Google Music account or purchased from the Google Play Music store. The experience of sitting on the couch, picking songs in your hand and listening to music almost immediately is great. It's not any different from what you can already do with AirPlay or Sonos (although it's more limited; more on that later), but it's a nice implementation for Android. If there are multiple Android devices on your home network, they all can contribute to a universal playlist, although I haven't been able to test that functionality yet. Similarly, if you have multiple Nexus Qs in your home, they can be synced or play different music in different rooms.
Google Play TV & Movies gets you access to Google's video content store. You can buy TV shows and movies, as well as rent movies. The selection seems decent, but it's definitely not as comprehensive as Amazon Instant or iTunes. In my limited searching, "Avatar" (the James Cameron movie) and episodes of "Mad Men" were not available, while only the most recent seasons of "Breaking Bad" and "The Office" were available. Additionally, searching for movies on a phone (rather than on the screen) isn't ideal for the living room, where more than one person may want to weigh in on what to watch.
I'm generally not a fan of watching YouTube content my TV, but the Nexus Q is best implementation I've encountered. The Android YouTube app is excellent for finding videos, and videos start playing quickly through the Nexus Q. Since they're streamed right from YouTube (rather than being routed through the phone), image quality is excellent. I still don't think YouTube is a must-have video service in the living room, but the Nexus Q does it well.
What it doesn't stream
It's hard to imagine that buyers won't be disappointed when they find that their new $300 orb really doesn't do that much. It streams the three aforementioned Google services, but it can't stream anything else: no Netflix, Hulu Plus, MLB.TV, Pandora, Spotify, Vudu, and so on. If you have videos, photos, or music stored on a DLNA server, it can't play them. If you have music that's stored on your phone, but not yet uploaded to Google Play Music, the Nexus Q can't play that either. Even within the Google's cloud services there are exceptions: you can't view photos from Picasa or your Google+ account. It's a $300 device that in many ways is more limited than a $50 Roku box or $100 Apple TV.
That's the deal-breaker for the Nexus Q. For practical purposes, this review could end right now, because until it gains the the power to push content from more apps, I can't imagine many people will be interested in the Nexus Q.
The Nexus Q has a built-in, so-called "audiophile-quality" amplifier, so it can power speakers without the need for a separate AV receiver or amplifier. It's a similar design to a Sonos Connect:Amp ($500), although Sonos is much more flexible for music playback.
I had it set up with a pair of Sony SS-B1000 bookshelf speakers in a medium-sized room. (Google is also selling companion Triad Bookshelf Speakers for $400.) The amp sounds good and you can turn it all the way up without distortion. Unfortunately, all the way up was loud, but not overwhelming. I was able to easily have a conversation, without shouting with my colleague Ty Pendlebury over the Flaming Lips' loud track "Watching the Planets." It's plenty loud for most cases, but it's not going to rock a house party. Switching over to Aperion's Intimus tower speakers was considerably better and louder, so it depends on how efficient your speakers are.
The Nexus Q's built-in amp led some early commenters to speculate that it can replace a full-sized AV receiver, but that's really not the case. There aren't any inputs on the back of the Nexus Q, so unless you plan on watching all your media on Google services, you'll need a receiver to power your cable box, game console, and other gear. Sure, it can replace an amp in a secondary room, but most home theater fans still need a receiver in the living room.
The Google Nexus Q isn't an attractive product for consumers. It's too expensive and really doesn't do that much, even if the quirky hardware is nice. And the fact that it requires an Android phone as a controller to work at all limits it as a home theater device -- what if the household member with an Android phone isn't home?
After playing with the box for a while, you do get the impulse to say, "It has potential," which is a familiar phrase to Google fans. But it's harder to give the Nexus Q leeway when Google already has a living-room box that gets the "It has potential" treatment: Google TV. Right now, Google has the worst of both worlds, with two living-room products that don't really work together and neither of which fills consumers' needs. The Nexus Q may be a better direction for Google than the convoluted Google TV, but it has a long way to go before it's a compelling purchase.