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Chromebooks' success punches Microsoft in the gut

Gregg Keizer | Jan. 2, 2014
Chromebooks had a very good year, according to retailer Amazon.com and industry analysts. And that's bad news for Microsoft.

Amazon's best-selling laptops on Friday included Acer and Samsung Chromebooks in the No. 1 and No. 2 spots.

Chromebooks increasingly threaten Windows' place in the personal computer market, particularly the laptop side, whose sales dominate those of the even older desktop form factor. Stalwart Microsoft partners, including Lenovo, Hewlett-Packard and Dell, have all dipped toes into the Chromebook waters, for example.

"OEMs can't sit back and depend on Wintel anymore," said Baker in an interview earlier this month.

Microsoft has been concerned enough with Chromebooks' popularity to target the devices with attack ads in its ongoing "Scroogled" campaign, arguing that they are not legitimate laptops.

Those ads are really Microsoft's only possible response to Chromebooks, since the Redmond, Wash. company cannot do to them what it did to netbooks.

Although the first wave of netbooks were powered by Linux, Microsoft quickly shoved the open-source OS aside by extending the sales lifespan of Windows XP, then created deliberately-crippled and lower-priced "Starter" editions of Vista and Windows 7 to keep OEMs (original equipment manufacturers) on the Windows train.

But Microsoft has no browser-based OS to show Chromebook OEMs, and has no light-footprint operating system suitable for basement-priced laptops except for Windows RT, which is unsuitable for non-touch screens. And unlike Google, Microsoft can hardly afford to give away Windows.

But Microsoft's biggest problem isn't Chrome OS and the Chromebooks its ads have belittled: It's tablets. Neither Microsoft or its web of partners have found much success in that market.

Baker's data on commercial sales illustrated that better than a busload of analysts. While Windows notebooks accounted for 34% of all personal computers and tablets sold to commercial buyers in the first 11 months of 2013, that represented a 20% decline from 2012. During the same period, tablets' share climbed by one-fifth to 27%, with Apple's iPad accounting for the majority of the tablets.

"The market for personal computing devices in commercial markets continues to shift and change, said Baker. "It is no accident that we are seeing the fruits of this change in the commercial markets as business and institutional buyers exploit the flexibility inherent in the new range of choices now open to them."

But when you're at the top of the personal computing device heap — as Microsoft was as recently as 2011 — words like "change" and "choice" are not welcome. From the mountaintop, the only way is down.

 

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