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One in five notebooks sold is now a Chromebok, Microsoft appears desperate to beat Google back

Seemingly out of nowhere Google Inc.'s (GOOG) Chrome OS -- a Linux-kernel based personal computer operating system -- has emerged as a dominant force in the PC market.

I. At Last a True Challenge to the Windows PC Hegemony

According to market share data from the NPD Group Inc. -- a top market research group -- this year has been a rough year for Apple, Inc. (AAPL) in terms of market share, and a mixed year for Microsoft Corp.'s (MSFT) Windows platfrom.  2013 was a year of unbelieveable growth, as Google's Chrome OS-powered "Chromebooks" emerged as the first compelling mass-market Windows alternative on the budget end in decades, inheriting the legacy of the netbook.

Between Jan. and Nov. 2013 Chromebooks accounted for 9.6 percent share of U.S. sales of all tablets, notebooks, and desktop personal computers combined.  On a year-to-year basis Chromebooks grew 47-fold in sales, a mind-boggling explosion.

That number contrasts harshly with Apple, Inc.'s (AAPL) laptop market share trends, which saw a drop from 2.6 to 1.8 percent in the traditional PC market (notebooks + desktops).


Chrome OS
Chrome OS is posting incredible growth.

 

While tablets continue to fill an increasing role in Americans' electronic lives, both in terms of work and play, the traditional PC (notebooks, desktops) is as relevant as ever in 2013.

Apple was never able to muster a true challenge to the coalition of Windows PC OEMs (at least with regards to market share), leaving Windows free to enjoy hegemony of this crucial market for years.  By contrast Chrome OS seems to have broken through, with Chromebooks now accounting for roughly one in five laptop sales this year.  Key to this surge has been support from OEMs that were once Windows exclusive or nearly Windows exclusive.


HP Chromebook 11 ($279 USD)

 


America's Hewlett Packard Comp. (HPQ), South Korea's Samsung Electronics Comp., Ltd. (KSC:005930), and Taiwan's Acer, Inc. (TPE:2353) have all rode the Chromebook wave to resurgent notebook sales, amidst the slump in Windows PC sales.

With Chromebooks single-handedly driving personal computer growth and Apple and Microsoft sinking in market share, other OEMs are eageryl jumping on board the Chrome OS train.  ASUSTek Computer Inc. (TPE:2357) and
Toshiba Corp. (TYO:6502) are planning 2014 Chromebook launches. 

Lenovo ThinkPad

Both Dell Inc. and Lenovo Group, Ltd. (HKG:0992) have announced education-geared Chromebook models (the Dell Chromebook 11 and the Lenovo ThinkPad x131e).  These models are expected to be joined by consumer-aimed models in 2014.  From a big picture perspective, this marks the first time in over two decades that every major Windows PC OEM has backed an alternative platform.

Notebook market shareLaptop sales; Jan.-Nov. 2012/2013 [Data Source: NPD Group]

While iPads -- Apple's biggest "PC" product -- are still outselling ChromeBooks 3-to-2 in the "PC" market, ChromeBooks are outselling Apple roughly 5-to-1 in the U.S. market.  Together 3 out of every 4 PCs sold (approximately) still run Windows.  But of the sales on alternatively platforms, Google controls 5 out of every 6 PCs sold, roughly.

II. U.S. Tablet Sales -- iPad Still King; Windows, Android Give Chase

The iPad's share of the PC market also fell from 17.1 percent to 15.8 percent, cannibalized by Chromebooks and Android tablets.  The fall might have been worse, had it not been for Apple's decision to produce a 7-inch tablet.

Steve Jobs -- Apple's late cofounder and CEO -- infamously remarked in Oct. 2010 at the All Things D conference keynote:

The reason we wouldn't make a 7-inch tablet isn't because we don't want to hit a price point, it's because we don't think you can make a great tablet with a 7-inch screen.  The 7-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.  [Increasing screen resolution on small devices is] meaningless, unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one quarter of the present size.

There are clear limits of how close you can physically place elements on a touch screen before users cannot reliably tap, flick or pinch them.  This is one of the key reasons we think the 10-inch screen size is the minimum size required to create great tablet apps.

Yet in Oct. 2012 Apple produced just such a "tweener" tablet, which its founder had condemned as inferior.  And the market proved Mr. Jobs was entirely wrong.


iPad mini with Retina Display

In tablets Apple also appears to be losing its edge in unit sales in the U.S., the world's most lucrative market.  Both Windows 8.x and Android tablets gobbled up part of the iPad's dominant U.S. market share in 2013, with Windows tablets being the biggest gainer.  Nearly 1 in 10 tablets sold now is a Windows tablet in the U.S.; nearly 1 in 3 is an Android tablet.

Globally Android tablets have passed the iPad, so take these numbers with a grain of salt, although they are meaningful given the U.S remains one of the world's highest margin markets, and trails only China in volume for personal electronics.

2013 Market ShareTablet sales; Jan.-Nov. 2012/2013 [Data Source: NPD Group]


In the tablet market Microsoft, Apple, and Google can all find positive signs in U.S. sales numbers.  For Apple, it may have fallen a bit, but it still controls roughly 6 out of every 10 tablet sales in the world's most lucrative market.

For Microsoft, it's the fast growing market player, even if it still controls less than 1 out of every 10 tablets sold.  For Google steady growth is slowly lofting it towards seizing the sales crown in the tablet market, as it already did internationally in 2013.

III. Desktop Sales -- Still Stronghold for Microsoft

The NPD Group numbers did not break down desktop sales by platform.  While desktop sales (8.5 percent growth) trailed in year-to-year growth versus laptop sales (28.9 percent growth) and tablet sales (49 percent growth) they still represented more than 1 in every 4 devices sold.

PC sales
Desktop PCs still remain a relevant, if a bit diminished market force. [Data Source: NPD Group]

In terms of OEMs HP leveraged its mix of Chrome OS and Windows product to remain #1 in global PC sales.  Meg Whitman's leadership is quietly transforming a company that nearly self-destructed under the suicidal, dysfunctional tenure of Léo Apotheker.

PC market share

Samsung -- which regularly vies with Apple for the top spot in the U.S. smartphone market -- used its impressive Android tablet and Chromebook lineup, along with a lighter mix of Windows product, to seize fourth place.  Its sales grew nearly six-fold.

Lenovo -- second place in terms of U.S. PC sales by OEM -- remains the strongest OEM not to have yet decisively jumped on the Chrome train.  Apple, meanwhile, took third place, largely on the merits of its iPad "PC" sales.

LG Electronics, Inc. (KSC:066570) -- an OEM who hopes to follow Samsung's rise to power in the U.S. market in 2014 -- perhaps gave us a taste of things to come, showing off a Chrome OS powered "Chromebase" desktop PC last week.



Expect "Chromebases" to battle Windows desktops in 2014.

 
The pricey Mac Pro and budget iMac lines have never posed a serious threat to Windows desktop sales.  Could Chromebases in 2014 follow in the line of Chromebooks' dramatic 2013?  We'll just have to wait and see.

Source: The NPD Group



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RE: Impressive growth in Chromebooks
By JasonMick (blog) on 12/26/2013 5:48:34 PM , Rating: 2
quote:

But will it last? I see Chromebooks as the latest fad like netbooks were. If they still have relevant market share in 2 years, I'll admit I am wrong. Some of the guys I know who work in consumer electronics retail say the return rate for Chromebooks has been rather high. I know that is just anecdotal, and just in a small market, so it may or may not be pertinent.
From one of your recent comments...
quote:
Funny, you accuse me of having an agenda when I am anti-Google for Google's blatent disrespect of privacy laws, but it is ok for you to have an agenda because your favorite company is being picked on? Boo hoo. Google made lots of enemies with IP theft, now it is coming home to roost.
So I suppose now we should all believe you that Chromebooks are doomed? You've made it clear that you despise Google. So at best your prediction is colored by a pretty strong bias.

..........

I'm somewhat of an independent commentator, as I own a couple Windows laptops, plus a late 2012 Retina MacBook Pro, and I bought an early Samsung Chromebook for an ex-GF.

So technically I've spent a fair bit of hands-on time with every major platform.

From a somewhat unbiased viewpoint yes, there's a current shortage of apps that are compiled to run properly offline with Chrome OS. And there's inherent privacy concerns given the cloud data hosting. But these concerns are overstated.

In the long term you can level similar criticism against virtually any tablet -- Android and iOS both are increasingly leveraging cloud storage, so is Microsoft (see: Office 365). Likewise, Apple's iPad was originally attacked as deficient of apps; like Chrome OS once market adoption took off, so too did developer interest.

So hate it all you want, but those tears you're crying will be frustration, not joy as Chromebooks aren't going anywhere. You can get a good Chromebook for $280, that offers similar functionality to an iPad -- low-end gaming, internet surfing, media viewing, bare-bones document editing, and email.

Chrome OS is meant to be light, so it runs pleasantly on low end hardware. By contrast, on $280 laptops, Windows 8.2 feels pretty clunky. It feels great on newer, more expensive touchscreen laptops like the Lenovo Carbon X1, but the low-end definitely isn't kind to Windows 8.x.

Chrome OS is winning based on price.

As long as it outperforms Windows in the $200-300 space, it will sell well.


RE: Impressive growth in Chromebooks
By Nortel on 12/26/13, Rating: -1
RE: Impressive growth in Chromebooks
By DT_Reader on 12/27/2013 4:10:25 PM , Rating: 5
Except for one thing: If you require a keyboard, it's probably to do useful work (like word processing or spreadsheets). If you don't have a 24/7 internet connection, a Chromebook is a brick - you can't get to your Google Docs. Frankly, I think the Chromebook will peak soon, because people will quickly realize that a tablet is much better for non-productive stuff and a full notebook or even netbook is better for productive stuff. The Chromebook tries to be both, but it's a poor compromise.

Now, if you could get to the underlying Linux and run some real programs on it...


RE: Impressive growth in Chromebooks
By zzynko on 12/30/2013 11:43:07 PM , Rating: 2
It's kind of funny that Jason is trying to pump Chromebooks as an alternative comparable to Windows or OSX. The fact is Chrome OS hasn't reached that point yet, doubt that it will any time soon.
http://www.digitaltrends.com/mobile/chromebook-wee...

WinRT has even more functionality/adaptability plus you don't need to be online to make full use of it.


RE: Impressive growth in Chromebooks
By robertgu on 12/26/2013 10:12:19 PM , Rating: 5
Man I dislike when authors and statisticians only use % growth or declines instead of using actual shipment units numbers. I could not find a single line in your article pointing to any volume numbers so I assume NPD did not provide any.

What I hate about using % is the same reason why I hate it when Windows Phone fanboys say stuff like: "Windows Phone is growing 400%. We're the fastest growing smartphone market!". Yes that can be accurate, but it is disingenuous IMO as their marketshare is a fraction that of the established players. Additionally, using % numbers only is usually a "goto" tool fanboys use to push their ideology. I prefer volume numbers instead.

From what I can glean by looking at the source article:

https://www.npd.com/wps/portal/npd/us/news/press-r...

They are providing data for the US commercial channel sales only and this report is not supposed to represent all of the US sells for PCs, tablets, notebooks.

According to Gartner, approximately 45 million desktops, laptops, and mobile PC (no tablet numbers are included in this figure unlike the NPD numbers) are estimated to be sold in the US between 1Q13 to 3Q13. Conventional wisdom states that approx. 50% of that total are laptops and mobile PCs for a estimated total of 22.5 million.

http://www.gartner.com/newsroom/id/2420816
http://www.gartner.com/newsroom/id/2544115
http://www.gartner.com/newsroom/id/2604616

Yet when you consider the data point for the source article is for US commercial channel sales only and includes desktops, notebooks, and tablets (which Gartner does not include tablet sales figures) between Jan. '13 to Nov. '13; it totals only 14.4 million devices.

According to the source NPD article 1.76 million Chromebooks and Andriod tablets were sold through the US commercial channel between Jan. '13 to Nov. '13 and chart at the bottom of the article makes it appear that it is roughly a 50/50 split, meaning roughly 880,000 Chromebooks were sold through the US commercial channel.

Doing more back of the napkin calculations makes it hard for me to reconcile how approximately 900k Chromebooks sold through US commercial channels equals "Chromebooks Capture 21 Percent of 2013 U.S. Notebook Sales" as your article's title states. When an estimated 22.5 million notebooks and mobile PCs were sold in that same timespan (Per Gartner estimates). That choice of article title and article theme feels misrepresented. If your title read: "Chromebooks Capture 21 Percent of 2013 U.S. Commercial Channel Notebook Sales" this would be a more accurate representation and make the article seem less fanboy induced.

-Respectfully


RE: Impressive growth in Chromebooks
By Motoman on 12/27/2013 5:41:09 PM , Rating: 3
^

Maybe you can cherry-pick out a segment of a market to make some kind of statement like what Mick did, but as a whole? Please. The Chromebook marketshare is a rounding error. I see no possible way to believe that Google's marketshare of the computer market isn't as small, or smaller, than Apple's. Which is someplace in the vicinity of 5%.

If you want to change my mind you're going to have to show us actual volumes of customer purchases by all types - Microsoft, Apple, and Chrome. From all channels.

And frankly, that's not going to happen. But if someone wants to find and post those numbers, I'll be willing to hear the story they tell.


RE: Impressive growth in Chromebooks
By web2dot0 on 12/27/2013 10:26:16 AM , Rating: 2
You keep saying that you are "unbiased", but you are not.

The key word, as you put it, is "somewhat of a an independent commentator", and "somewhat [of an] unbiased viewport"

Just because you own Macbook Pro and Windows and bought (but not bought one for yourself) a Chromebook, doesn't make you unbiased or objective.

Chromebook has a place in the game just like iPad and Laptops, but that's about it. It's functionality will always be limited (as it's designed to do). It's a transition product like Netbooks.

Ultimately, no one wants but buy themselves a iPad, Chromebook, and a Laptop. It makes no sense and the first company that can crack the code will win the ultimate prize.

It's pretty clear right now that what Google is doing is testing the waters and see what sticks. Samsung style. It's not a bad strategy, but doesn't mean it's a winning formula.

Android gets a big chunk of the market now, but how much is Google really making off Android? Do you know that they are making jack all in China?

In China, people aren't even using Google App Store, and they are leeching off Android's open source code. (And what is Google gonna do if they violate GPL license? Storm into China?).

Ultimately, you can make designer jean knock offs, but people will still buy designer jeans. That's Apple. But if you don't even bother to brand yourself exclusive, any joe blow can make identical products and there's nothing you can do about it. That's the challenge for Google. They have the reach, but they make ZERO off it.

It's like Chinese movies and actors. Their market reach is crazy, but how much of it goes to its rightful owners?

Food for thought.


RE: Impressive growth in Chromebooks
By nafhan on 12/27/2013 10:45:16 AM , Rating: 2
Google doesn't sell software, and they don't really make much (directly) off Android in the US or Europe either. They do, however, sell ads... and they make quite a bit of money off of that. This is part of why it's difficult comparing companies like MS, Apple, and Google, because we've got: a (mostly) software company, a (mostly) hardware company, and a (mostly) advertising company. If, say, Apple and Google aren't making the money on software sales that MS does, it doesn't mean they are doing poorly.


RE: Impressive growth in Chromebooks
By web2dot0 on 12/27/2013 12:47:55 PM , Rating: 2
Ads they don't make much off the phones buddy. Which part of that don't you understand?

Google Ads off the browsing web and search yeah.

Google needs to make money off Android because it needs a end game. That's why that want to get into the hardware business ..... sorry to burst your bubble.


RE: Impressive growth in Chromebooks
By nafhan on 12/27/2013 1:36:07 PM , Rating: 2
I'm not sure what bubble you think you're bursting...

Anyway, you're sort of right in that Google needs to diversify, but I think hardware is nothing more than a means to an end in that game. What Google needs to do (and what they, and most major consumer tech companies appear to be working on) is getting into services.

With hardware, I think what people really want is to either show it off (i.e. it's a fashion accessory) or for it to be completely invisible. Right now, completely hiding portable tech is, at the least, very difficult, so the companies making pretty stuff are doing well. Endgame, though, will be technology that you don't see. At that point, which I don't believe to be terribly far off, it will not be good to be a hardware manufacturer.


By web2dot0 on 12/28/2013 4:37:48 PM , Rating: 2
Google have been in the services business ....

It's called Google Search Engine. ;-D

Their attempt to use Google App Store have failed in China because anyone can create their own Google App Stores. Google cannot stop it ... because fundamentally, the ecosystem was created on the premise that anyone can do anything they want. The ultimate flexibility. Hence the popularity.

Now that Apple made its appearance in China (officially), it's not so easy for the chinese to bypass the AppStore due to the tight restrictions on the Apple EcoSystem. People will visit App Store. They will be force to spend $$$ to get what they want.

Fake Apple App Store is 1000x harder. Apple can simply shut those places down with their OS (remember, software and hardware integration). You can't stop it. They hold all the keys. ;-D

There is Pros and Cons to each approach (Google and Apple). Blindly call Apple "evil" and Google "good" is what fools do. Take sides when there aren't any to begin with.

What's truly amazing is Apple is able to make Computing .... cool. Why do you think they create Apple Stores? It's a shopping experience. What's more impressive, going to Apple Store or going to Microsoft Kiosk? Dell Kiosk? It's a joke.

They are so far ahead of the curve that it's not even funny. Apple recognize that the general public don't care about specs, features. What they really care about is branding and social acceptance, good services, and good reputation.

The technology behind it is a means to an end of building a brand. That's why they focus so much of their R&D on chassis design, software integration, lightweight parts, etc ....

There's much more profit to be made selling $200 designer jeans than going to your local chinese market selling $10 jeans. That is, if you are interested in making a profit.

Not everyone can afford $200 jeans, but Apple don't need 100% market share. They aren't interested in the lowest common denominator. That's the beauty. They have cracked the code.


RE: Impressive growth in Chromebooks
By Mint on 12/27/2013 10:49:23 AM , Rating: 2
Here's the thing: We already saw Linux try to beat MS on netbooks, and it utterly failed. Even though OEMs saved on licensing costs by not including Windows, and priced them lower, they didn't sell near as well as Windows netbooks and just faded away.

Maybe Google's better app support and marketing will make things different this time, but Chrome OS apps are still woeful compared to those for windows, as is printer/peripheral compatibility.


By Solandri on 12/27/2013 4:28:12 PM , Rating: 2
I would argue that the original netbook (a consumption-only device not running Windows) didn't die. It morphed into tablets (also primarily consumption devices not running Windows) as people discovered that if you're just consuming content, you don't really need a keyboard.

The netbook which died ran Windows and for all intents and purposes was a cheap laptop. It got subsumed by the low-end of the regular laptop market as the cheapest price for a real laptop dropped from about $600 to about $350 from 2007-2013.

I'm not really sure where Chromebooks fit into this though. They're not consumption-only (in fact one of their touted strengths is being able to use it and the keyboard to create documents). They're not Windows but they act like laptops, and they're priced like (cheap) tablets. They're just so orthogonal to the predecessors in the market that it's difficult to predict their fate.

If I had to guess, I'd say their success rests on whether or not Google Docs can supplant Office for productivity tasks. Word and sometimes Powerpoint/Excel are about the only reason most of my clients get a laptop instead of a tablet. Yeah it's not as polished or as full-featured as Office. But even I only use about 5% of the features in Office. You can get 98% of the functionality with only 5% of the features.


By ClownPuncher on 12/27/2013 12:09:49 PM , Rating: 2
Chromebook is a garbage platform for garbage people with garbage standards.


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