Chromebooks distributors are seeing strong sales of the hardware in the first few weeks of the third quarter thanks to a boost from the education sector.
In a market that demonstrates a fair amount of seasonality the third quarter has become the strongest for sales of Chromebooks as education sales filter through.
People mocked when Google’s high-priced Chromebook Pixel laptop was released.
After all who would buy a $999 Chromebook Pixel 2 which seemed to do most of its work on the internet running lite services like Google Docs and Facebook but not traditional PC software like Microsoft Office and Adobe Photoshop.
The Dell Chromebook 13 starts at $399 for a laptop with a metal exterior, carbon fibre cover, 13-inch 1,920×1,080 screen, Intel Celeron processor, 2 gigabytes of memory and 16GB of storage. Prices range up to $899 for models with touch screens.
However it did rather well and Dell was so impressed that it designed a much cheaper version of its own.
Google’s Rajen Sheth told CNet the schools market was driving a move to Chromebooks.
They accounted for 8.1 percent of portable computer shipments in the first quarter of 2015 in the United States. That figure is predicted to rise to 10.6 percent for the full year and rise further to 12.4 percent for 2016.
Schools like Chromebooks because the hardware is cheap and teachers can control what they provide to the kids and restrict what kids can access.
Chromebooks have low management costs and are centrally managed so teachers don’t waste time handling tech support, he said.
The devices are easily shared, with students’ data and settings stored in the cloud and retrieved when they log in. And Google Apps for Education, free to schools and now with more than 45 million students using it daily, offers low-cost software for word processing, email, file sharing, presentations and chatting.
Now, Google hopes to push Chrome OS more into businesses, too. The low purchasing and management costs are a big part of the sales pitch there, too.
“There are 4 billion working adults in the world, but only about 750 million PCs,” Sheth said. “With the Chromebook, companies are able to expand the population of users who have access to those devices.”
There’s more bad news for the PC market as it appears that Google Chromebooks are taking market share in the low end and the education markets.
ABI Research said Chromebooks, which rely heavily on the cloud, start up much faster than Windows PCsand are pretty affordable too, have “gained traction” in the North American market.
And it’s not just home users who are buying them – organisations are buying them too, with shipments close to five million last year.
Analyst Stephanie Van Vactor said that cloud services and the collapse of economies worldwide were the impetus for designers and developers to create cheap and cheerful devices, like the Chromebook.
“Chromebooks were the result, and the ‘anytime anywhere” access to content is a mobile-centric game changer,” she said.
The education market in particular has a yen for Chromebooks, mostly because of Google Apps for Education, she said. The business and the education sector together accounted for 62 percent of Chromebook shipments.
Another factor is the price. The average selling price for a Chromebook is $226 in the States, while it’s $420 for a tablet – presumably an Apple iPad.
“Google has taken to heart the popularity of mobile devices and developed a personal computing device that is a functional solution,” said Van Vactor. She said: “This style of computing works for the on the go lifestyle people are becoming accustomed to and will continue to impact the future of computing as the market shifts and changes.”
AMD chief technical officer Mark Papermaster has dismissed Chromebooks as “not worth it” and explained why his outfit is not behind the technology.
He said that it was important to look at Chromebook and what Google’s grand plan with it is.
“For us, it’s just a business decision, when you need our type of CPU and graphics technology that can make a difference.”
Chromebook sales are tiny. IDC estimated that 4.6 million Chromebooks were sold in 2014, compared to 304 million PCs for the year.
Intel has come to dominate Chromebook sales with Celeron and Atom chips, although some models also feature third-party ARM chips inside.
But Chromebooks are generally considered low-cost productivity machines and AMD is trying to place itself as a graphics and media chipmaker. Carrizo, dedicates four “Excavator” CPU cores against eight Radeon graphics cores and16 percent of the die is dedicated to CPU cores.
“For us, it’s when do you need our CPU and graphics capability that can make a difference,” Papermaster said. “Again, you’ll see that there’s these rock-bottom markets… so those don’t have our value proposition.”
“We play in the whole range of the market. We’ll play in the low-cost value” market, Papermaster added. “You have to at least get paid for that value when you’re working on graphics. You go below that, and you’re looking at $7 chips.”
A number of vendors plan to release large screen Chromebooks in the first half of 2015 with prices set to challenge Wintel based notebooks.
Google has laid out a reference framework for Chromebooks which means they will cost less than $300 per unit, according to a report from market intelligence firm Digitimes Research.
Dell and Acer will take the lead in cutting prices, with the former introducing a 15.6-inch Chromebook and Acer will introduce a model with the same size screen early next year.
Both are set to use Intel’s Broadwell-U microprocessor and the prices will mean stiff competition as Microsoft wants its hardware partners to produce notebooks costing less than $250.
However, Microsoft cannot hope to get hardware vendors to make Windows 8.1 with Bing machines for the same price point and with similar performance. Although Microsoft has cut licensing fees for Windows in an attempt to beat off competition from Chromebooks, the bill of materials to make notebooks precludes screens 15 inches and above.
Lenovo and Asustek are expected to release Chromebooks next year that will cost $149.
The machines will be powered by Rockchip technology and that is in the embrace of Intel for design and distributing its SoFIA chips, according to Digitimes Research.
The price will be around 25 percent less than the cheapest machine on the block – the C720 from Acer.
But the move is also likely to put Intel at loggerheads with its long time partner Microsoft, which is desperate to knock the Google Chromebook project on the head, and has lowered its licensing fees in a bid to be competitive and keep its place in the notebook market.
The research outfit thinks that both machines will use an 11.6-inch screen. The Lenovo device is likely to appear early next year.
Chromebooks are the new netbooks, but not the in the sense that they’ll go extinct over the next couple of years. They are dirt cheap, making them ideal for some niches and recent surveys indicate that Chromebook deployment in SMBs and even some bigger organisations makes a lot of financial sense.
On the other hand, Chromebooks could help PC vendors weather the storm as they complement proper laptops and to some extent tablets. HP, Lenovo, Samsung and Acer are already on board. Asus is rumoured to be working on Chromebooks as well, but what about Dell?
Dell doesn’t do Chromebooks and The VAR Guy reckons that there’s a good chance it won’t do any in the future, either. Dell is trying to go private, some shareholders don’t like the idea one bit and one particular detail could end all hope of Dell Chromebooks. If Dell does indeed go private, it will have to accept a $2 billion loan from Microsoft.
It is speculation at this point, but a $2 billion loan tends to come with some strings attached. Needless to say Microsoft has a vested interest in keeping Chromebooks away from mainstream markets and it already has a great relationship with Dell. In fact, Dell is one of the few PC vendors that did not try to expand into Android tablets. It does make tablets, but they run Windows RT and Windows 8 rather than Android. Its only foray into Android waters was the Ophelia, a thumb drive PC based on Android.
It’s quite a conundrum and it might get even worse. Chromebooks are just getting started and if HP, Lenovo and the rest of the gang start reporting positive sales figures over the next few months, pitchfork wielding shareholders could start demanding Chromebooks and Android gear from Dell. Lenovo is already making a killing on Android smartphones and tablets, Acer and Asus are also doing quite well, so why should Dell shareholders settle for anything less?
Acer has committed the ultimate act of Windows heresy – it wants to expand its presence in the Chromebook and Android space. The shift was revealed by Acer president Jim Wang during the company’s latest conference call.
“We are trying to grow our non-Windows business as soon as possible. Android is very popular in smartphones and dominant in tablets…I also see a new market there for Chromebooks,” said Wang.
According to the Wall Street Journal, Wong expects Android and Chromebooks to account for 10 to 12 percent of Acer’s revenue this year. However, that figure could rise to a whopping 30 percent next year. At the moment, Chromebooks account for about three percent of Acer’s shipments.
Yesterday it emerged that Acer suffered a massive drop in EMEA shipments last quarter. It took a 44.7 percent hit compared to Q2 2012. With that in mind, it is abundantly clear why Acer is trying to tap other markets.
Over the past two years most PC makers, including Acer, tried to enter the Android tablet market and they don’t have much to show for it. Windows tablets are still dead in the water and earlier this week Acer slashed the price of its relatively new W3 Windows by 20 percent.
It appears that Chromebooks will be Acer’s next bet, as the Chromebook market is not nearly as saturated as the tablet market. However, Chromebooks also lack the mass consumer appeal of cheap and fun tablets.
Chromebooks are relatively new devices and they have yet to make their mark, but Forrester Research believes they have what it takes to make their presence felt in enterprise markets.
Although sales are still relatively low, bear in mind that Chromebooks are going after a limited niche market and that market does not include businesses, at least not for the time being.
However, Forrester’s latest Chromebook report concluded that businesses should rethink their approach to Chromebooks. At the moment only 28 percent of enterprises have some interest in Chromebooks, while 82 percent are interested in laptops. Despite the not-so-encouraging figures, Forrester’s research shows that there are a number of circumstances where Chromebooks may trump PCs, Macs and tablets in a business setting.
First of all Chromebooks are relatively cheap and they could be offered to specific classes of workers in a mixed environment with PCs and tablets, all at a relatively low cost. They are also a good fit for organizations that have adopted Gmail and other Google apps and services. Lastly, organizations that plan to deploy devices in a customer-facing think kiosk setting should be interested in Chromebooks.
Analyst J.P. Gownder argues that Chromebooks offer the prospect of radically reducing the amount of time IT staff spends keeping the devices going. Instead of wasting time on installing software and creating images on laptops, the techies could be freed up to do something a bit more productive. Due to their simplicity and reliance on Google’s cloud-based services, Chromebooks offer high uptime, low service costs and scalable deployment.
Windows and Microsoft Office have been a staple of businesses for decades, but Chromebooks might have what it takes to disrupt Redmond’s (strangle) hold on the market. They are cheap to procure, easy to deploy and even easier to maintain. Although many punters still view Chromebooks as a cosumerish replacement for netbooks, these advantages could transform them into a viable alternative to proper laptops in a number of settings.
Intel said yesterday it will host a symposium in Taipei to discuss the development of 2-in-1 hybrids with supply chain partners. The event is part of Intel’s push for cheaper x86 devices, which could take on ARM-based tablets, at least in theory.
Intel knows that x86 tablets are simply too pricey to compete with ARM tablets, both on the hardware and software fronts. However, if it manages to push prices down, upcoming 2-in-1s could still be competitive.
Intel VP and general manager of global ecosystem development Zane Ball told reporters that he expects prices of 2-in-1s to fall next year, thanks to lower component costs. He said most companies are currently capable of delivering $399 devices, but the real challenge will be getting the price down to $299, reports Focus Taiwan.
It won’t be easy. At the moment there are just 15 products that fit Intel’s 2-in-1 spec and the number is expected to grow to 60 designs next year. These are hardly impressive figures and many analysts believe Intel will have a very tough time marketing the devices, especially if prices remain high.
However, although $299 is still not enough to combat cheap Android tablets, it is still an interesting price point. Cheap 2-in-1s could do well in some niche markets. They sound like the perfect upgrade for netbook users and they could steal some market share from Google’s ultra-cheap Chromebooks.
Higher end models could be a replacement for ultraportables and small Ultrabooks.
Demand for traditional desktops and laptops has been waning for years and the last two quarters saw the biggest slump in PC shipments in decades, but Google’s Chromebooks have bucked the trend.
Envisioned as cheap alternatives to Windows based laptops and netbooks, Chromebooks are cheap and cheerful, usually priced between $199 and $299. Although the market is still on a tablet binge, consumers seem to be quite interested in Chromebooks as well.
NPD estimates that Chromebooks have already managed to seize 20 to 25 percent of the sub-$300 laptop market in the Land of the Free. Overall, Chromebooks had a 4 to 5 percent market share in the first quarter, up from one to two percent a year ago.
That is a pretty impressive share for a category of products that practically didn’t exist a year ago and even today many consumers have no idea what a Chromebook actually is. NPD analyst Stephen Baker told Bloomberg that he was initially sceptical, but he now believes Chrombooks have managed to find a niche in the marketplace.
“The entire computing ecosystem is undergoing some radical change, and I think Google has its part in that change,” he said.
The untimely demise of the netbook also played a role in the Chromebook surge. Although netbooks weren’t that big among average consumers, they were essentially a good way of getting very cheap yet fully functional computers to schools and other institutions on a budget.
Chromebooks are just more of the same, but their success beckons the question – couldn’t have Intel and Microsoft played their netbook cards a bit better five years ago? After all, Google seems to be proving that there is still enough room for dirt cheap laptops, in spite of the tablet juggernaut. It seems Intel made a terrible strategic miscalculation with Atom cores.
Five years ago Chipzilla didn’t want to peddle high-volume low-margin chips, yet now it is struggling to come up with competitive mobile SoCs, which are basically an evolution of the original Atom concept. Maintaining higher margins and appeasing the Street with good quarterly results seems to have been more important than a comprehensive long-term mobile strategy.
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