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Chromebooks currently have a small market share, but new models like the Acer C720P (touch edition) are hot items

Microsoft Corp.'s (MSFT) latest round of attacks on archrival Google Inc. (GOOG) is heating up.  After appearing to pull the plug on the "Scroogled" campaign -- the brainchild of a former campaign advisor to President William Jefferson "Bill" Clinton (D) -- Microsoft brought it back with a vengeance, unveiling a whole line of Google-mocking products ranging from mugs to shirts.

I. Microsoft Calls Chromebooks "Bricks"

Now Microsoft has come back with a new commercial featuring Gold & Silver Pawn Shop, the Las Vegas, Nevada pawn shop that gained a national following via the History Channel's reality TV series Pawn Stars.

Ricky Harrison -- the younger member of the pawn shop's three generation family who specialize in detecting "fake" products -- receives a call from a Microsoft employee who wants to know if a Google "Chromebook" might be "worth something".  Mr. Harrison laughs, responding, "[W]hen you're not connected, it's pretty much a brick."

Okay that's not quite accurate. Chrome OS uses the Chrome browser as the environment to run apps within, however, it does have offline builds of its core apps like Google Docs, and recently gave developers tools to make third-party apps offline accessible.  And while it leverages the cloud, that's not very different from Microsoft's own efforts, slowly phasing out the PC-side standalone Office suite for the cloud-enabled Office 365 app suite.

Chrome OS
Many Chrome OS apps now work just fine offline, contrary to Microsoft's claims.

At the root of Microsoft's argument is a simple assumption Microsoft firmly believes in -- if a laptop or desktop doesn't have Windows 8.1 and Office on it, it's pretty much useless. This is a sentiment echoed by hardcore Windows fans like Windows SuperSite blogger Paul Thurrott, who writes, "Google's Chromebook initiative is a laughable attempt to turn a web browser into an operating system that runs on mostly lackluster hardware."

II. Why Windows Supporters are Scared

Is Microsoft scared of the Chromebook, just trying to be funny, or some combination of both?

Compared to Apple Inc.'s (AAPL) Mac computer line, Chromebook sales appear less than impressive at present.  The Interactive Data Corp. (IDCreports that Chromebooks are only expected to move 3 million units this year, accounting for about 1 percent of the market.  But that figure only covers warehouse sales to brick-and-mortar establishments.  By contrast on some direct sellers like, Inc. (AMZN) Chromebooks are outselling Windows 8.1 laptops.  Approximately 22 percent of school districts across the U.S. have adopted Chromebooks.

Chrome OS
[Image Source: ZDNet]

The NPD Group Inc. estimates that in H1 2013 Chromebooks captured 20-25 percent of the sub-$300 laptop market.  They estimate that 3 percent of laptops (all prices) bought in August-September back-to-school shopping season were Chrombooks.  And with new models out in time for the holidays, NPD Group VP of Industry Analysis Stephen Baker predicts Q4 2013 will be a watershed moment in Chrome OS's market adoption.  He comments:

[Chromebooks] are very well-positioned to expand that share over the holiday period The significant marketing and advertising support Google is providing its partners is likely to be a key a feature in helping continue to raise awareness of the product and show consumers that it is a reasonably priced alternative to a tablet.

With Windows 8/8.1 unpopularity riding at all time highs and with consumers opting to avoid high-end hardware in general, PC sales are seeing historic drops.  Microsoft appears less concerned about Apple -- whose sales have also been affected by the latter market trend.  After all Microsoft always prided itself as delivering quality at a budget price, as its past anti-Apple "I'm a PC" campaign illustrated.

In that regard Chromebooks represent perhaps a more serious long-term threat to Microsoft's bottom line.  Generally priced at $300 USD or lower, many of the models offer 7-9 hours of battery life, significantly better than the 4-7 hours that budget-to-mid-range Windows 8.1 laptops get.  Otherwise the hardware spec is somewhat low-end -- but then again so are the specs of budget Windows laptops.

Aside from targeting a market Microsoft took such pride in dominating, Chromebooks also are a headache for Microsoft as they're giving OEMs frustrated with Microsoft's role in poor PC sales an outlet.  One such OEM is Hewlett-Packard Comp. (HPQ).  Is the HP Chromebook 11 a brick?  

HP Chromebook 11
HP Chromebook 11 [Image Source: AnandTech]

Microsoft and Pawn Stars may say so, but AnandTech says otherwise, writing:

Under Google’s influence, HP has built a near perfect example of what an entry level PC should be. It boots fast (< 13 seconds even in dev mode), has a great display, comes with dual-band 2-stream 802.11n WiFi, has good sounding speakers, looks stylish, is light and feels well built. The keyboard is great and even the clickpad isn’t as bad as it is on far more expensive PCs.

You honestly get one of the best examples of a portable machine for $279, and that’s without even relying on the benefits of Chrome OS to help sell the bundle. Anyone looking for a glorified web browsing, email checking, internet terminal will be right at home with Chrome OS. Flash works and you obviously get what’s arguably the world’s best web browser. You don’t have to worry about updates, malware or viruses, all of that is taken care of for you. It’s the modern typewriter equivalent, a true entry level computer, and HP/Google have done an excellent job in bringing this to market.

ASUSTek Computer Inc. (TPE:2357) this quarter became the latest OEM to "cheat on" Microsoft with Chromebooks.  The message from OEMs to Microsoft seems clear -- "If we're not getting satisfaction in this marriage, we'll go out and find satisfaction elsewhere."

And "elsewhere" appears to the Chrome OS.

III. New Touch-Screen Acer Chromebook Wows 

In related news Acer Inc. (TPE:2353) strengthened its already best-selling Chromebook lineup this week with the addition of the C720P -- the touch-screen upgraded variant of the popular C720 which retails for $200 USD (2 GB) and $250 (4 GB), depending on your preference memory-wise.
Acer C720P

For $299 you get a thin (0.78-inch thick) and light (2.98 lb) laptop with:
  • 1377x768 11.6 inch screen with multitouch
  • Intel Corp. (INTC) dual-core 1.4 GHz Celeron 2955U (Haswell)
  • 7.5 hr. of battery life
  • 2 GB DRAM
  • 100 GB of Google Drive cloud storage (free for two years)
  • 12 Free GoGo Wireless in-flight passes
  • 32 GB SSD w/ 7 second boot
  • WiFi 802.11 a/b/g/n
Acer C720P
Acer C720P
Acer C720P

By contrast about the best $300 USD will get you in terms of Windows touchscreen laptops is a Lenovo Group, Ltd. (HKG:0992IdeaPad S210 11.6-inch touchscreen laptop (and that's only when it's discounted 29 percent with a big sale).  

The Lenovo machine comes with slightly more memory (4 GB), but with a last-generation Ivy Bridge processor, the dual-core 1.9 GHz Intel Pentium 2127U ULV.  It's thicker (0.90 in.), weighs more (3.1 lb), has no SSD (instead it has a cheaper 500 GB, 5400 rpm HDD).  
Lenovo Ideapad S210
The Lenovo Ideapad S210 11.6-inch. (w/ Touchscreen, Windows 8.1) sells for $300 USD sale, but only gets about half the battery life of the Chromebook, has no SSD, and has a last-generation Intel processor.

And the kicker? The Windows competitor gets a claimed 4 hours of battery life -- about half what the Acer C720P Chromebook promises.  Well, you know what they say -- if you can't beat them make fun of them.

Windows 8.1 RTm
But Microsoft does offer one unique "benefit" -- Metro UI. [Image Source: CNET]

Feel free to share your thoughts on which budget laptop is "worthless" -- the thin, light, Chromebook with a fast SSD, latest-generation Intel processor, and 7.5 hours of battery life, or the Metro UI-packing Windows 8.1 laptop with more memory (4 GB), but a last generation processor, a slower HDD, a thick/heavier body, and only 4 hours of moderate-to-light use on a full charge. 

Sources: Microsoft on YouTube, Acer [C720P press release]

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RE: Great Point Microsoft
By jimbojimbo on 11/28/2013 1:25:48 AM , Rating: 2
Normally I always disagree with you but you're right here. Why are they so worried about Google everything? They should be going after the company that has been telling lies about them for years, Apple. It's as if Apple can punch Microsoft in the face over and over and they'll just shrink away quietly with no response. After years they get frustrated and start taking it out on Google instead of the real competition. It's ridiculous.
What do most people do with their laptops anyway? Listen to some music, check their email, FB, Twitter, Pinterest, stuff like that? Gee, all of that's available on Chromebook! Also, why is MS so concerned that Google is using targeted advertising but not saying anything about FB, Twitter, or Pinterest? They ALL do. Are they also telling us Bing doesn't pay attention to what we search for to target their advertising?

RE: Great Point Microsoft
By Solandri on 11/28/2013 2:51:56 AM , Rating: 5
Apple and Microsoft are in bed with each other. It all started when Apple was cash-starved and Microsoft was their knight in shining armor and invested $150 million.

Ever since then, the two have been chummy - either cross-licensing stuff, or not suing each other. You'll notice they don't file lawsuits against each other for stuff they rabidly go after in Android.

And I disagree with your premise that Apple is Microsoft's primary competitor. Apple sells to a niche market. (I don't mean that as an insult - they go after a very high-profit niche. But they're content to ignore the huge bulk of the market which wants low-cost products.) Microsoft aims for a broader market (almost the entire market in fact). If you look at which OS also covers the broader mobile market, it's Android, not iOS.

RE: Great Point Microsoft
By Tony Swash on 11/28/2013 6:45:26 AM , Rating: 1
Apple and Microsoft are in bed with each other.

If that was true it's odd that Apple made these

It all started when Apple was cash-starved and Microsoft was their knight in shining armor and invested $150 million.

Actually Apple had over $2 billion in cash at the time. What the Microsoft investment and commitment on Office did was help restore a sense of confidence amongst it's shareholders and thus get them off of the back of Jobs while he got on with a painful restructuring. The investment was PR and the $150 was chump change.

The reason Microsoft is particularly focussed on competition from Google is because Google set out to destroy the very basis of Microsoft's business by giving away software for free. Microsoft's business strategy has always rested on the idea that the bulk of the value in computing is accrued in the realm of software rather than hardware. That is no longer true and the value of software as standalone products, including operating systems, is collapsing. This process, of collapsing the value of software, was pushed the hardest by Google but is now an unstoppable general process in the tech world. In the new tech markets of devices, which is clearly eclipsing the old PC ecosystem in terms of value, growth and business opportunity, almost all the value is accruing to hardware makers and most accrues to the makers of integrated devices. Microsoft's great challenge is to make a successful transition to making large scale profits on integrated devices before, and without accelerating, the decline of it's old standalone software business.

RE: Great Point Microsoft
By bigboxes on 11/29/2013 12:54:59 AM , Rating: 2
Ah, there you are! Tard.

RE: Great Point Microsoft
By abhaxus on 11/29/13, Rating: 0
RE: Great Point Microsoft
By mckinney on 11/30/2013 12:42:26 AM , Rating: 2
Microsoft was their knight in shining armor

Microsoft had to invest in Apple as a matter of self preservation. Microsoft knew in 9 months that the Department of Justice was filing an Antitrust suit against them. MS couldn't allow the closest thing to an OS competitor to fold...even if it was a niche player that was 90% behind them. That was also why Gates also agreed to develop Office for the Mac for an additional 5 years.

MS had to make a ton of cash when they sold the stock.

RE: Great Point Microsoft
By nikon133 on 12/1/2013 4:40:42 PM , Rating: 2
I'd say it is pre-emptive move, rather that scare. As in, undermine potential competitor before it gets strong.

Kind of common practice, I'd say. Google is doing the same with Windows Phone, by not releasing Gmaps and YouTube apps on platform, but at he same time preventing MS do release full featured apps on their own. And MS is preventing 3rd party browsers on RT/Modern GUI. They will all do much as they can without being legally nailed for that.

Re Chromebook, I honestly don't see it as competitor to Windows PC. At best, it is competing with ARM tablets. What can you do on Chromebook that you cannot with keyboard-dock equipped tablet? And, thanks to apps library, there are still plenty of thing you can do on tablets that you cannot do on CB.

And then, there's a selection of free Linux distros for Windows alternative seekers, as well as OSX on high-end. Where does CB fit?

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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