How Will Microsoft Respond to the Success of Chromebooks?

by Ostatic Staff - Mar. 03, 2014

As we've reported, although market research findings have been very bleak for PCs and PC equipment makers, Chromebooks--portable computers based on Google's Chrome OS platform--have continued to sell well, and did especially well during the 2013 holiday season. These devices feature low prices, with some of the them going for $200, and a cloud-centric approach to working with apps and data. They also increasingly come with freebies, such as large amounts of free, online storage.

The success of Chromebooks is causing a lot of speculation that Microsoft may be concerned about them. Microsoft also has a new CEO who knows his way around the cloud, so we could see some new approaches from the Redmond giant on the mobile computing front.

Some reports are even forecasting the arrival of "Bingbooks," where Microsoft might marry the Bing search engine to a platform play similar to the one found in Chromebooks.  That seems unlikely since Microsoft would have to retool a lot of its platform-centric approach to mobile computing, but the company could have other responses in the works.

Harry McCracken notes that Chromebooks could cause the price of Windows to come down:

"Web-centric laptops based on Google’s Chromebook platform often sell for about $200-$250, while it’s tough to find much in the way of Windows notebooks for less than around $300-$350. The license fee for Windows accounts for a fair chunk of that difference; Chromebooks, by contrast, are as cheap as they are in part because Google doesn’t charge for Chrome OS. Which it can do because of all the ad-subsidized Google services Chromebook owners use."

That's not only true, but I've made the point before that because Chromebooks can feed users into Google's lucrative search/ad ecosystem, Google would be wise to offer more incentives and free services to Chromebook buyers.  Google has already explored this avenue.  For example, buyers of Chromebooks have been getting 100GB of free Google Drive storage, free WiFi when flying, Google Play incentives and more.

If you offer users $200 laptops that come with a slew of free incentives, it becomes hard to justify spending $600 for a Windows laptop that isn't a whole lot more capable. This year, we're likely to see Google step up its strategic moves around Chromebooks, and Microsoft change the way it responds. Stay tuned for more.