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August 12, 2014

Chromebook sales to triple! Is Microsoft missing a trick?

Cloud-orientated laptops to reach 15 million by 2017.

By Ben Sullivan

Chromebooks, budget laptops that run on Google’s Chrome operating system, are quickly becoming hot property as sales are set to reach almost 15 million in 2017.

The predictions were dug out by research firm Gartner, which said that sales will hit 5.2 million units this year, a fantastical 70% jump from sales in 2013.

Isabelle Durana, a chief analyst at Gartner, said: "Competition in the Chromebook market is intensifying as more vendors launch Chromebooks, with eight models in the market in 2014.

Chromebooks, named after their namesake operating system from Google, were first introduced to the market in 2011 by manufacturers Samsung and Acer. These two were still the dominant leaders in the Chromebook market in 2013. Dell, HP, and Lenovo also make Chromebooks, but hold a much smaller market share.

The laptops are cloud-orientated devices, and mainly use the cloud for storage. Applications are accessed or downloaded from the Google Play store, for which a wireless Internet connection through a Wi-Fi or cellular network is required. However, local storage capacity is usually small on Chromebooks, currently reaching around 16GB.

Samsung came out on top last year, selling 1.7 million units in 2013. Samsung’s particular dominance came in the eeducation market, where its devices are popular in primary and secondary schools.

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Acer had a 21.4% market share in 2013, and focused on delivering Chromebooks at a bargain price level, using Intel rather than ARM-based CPUs.

HP came in third, with a much smaller 6.8% market share. Lenovo stretched to a 6.7% share.

Gartner still said that Chromebooks will remain a niche market during the next five years, and for them to reach a wider audience, the vendors needs to offer increasingly better features that address the changing patterns in cloud usage.


Source: Gartner July 2014

"Making a competitive Chromebook is not just a matter of hardware and price; what is most important is to show how the device’s cloud-based architecture provides genuine advantages to users," said Durand.

In the United States, demand for Chromebooks is mainly driven by the education sector. Gartner’s report estimated that the education sector accounted for nearly 85 percent of Chromebook sales in 2013. In addition, of the 2.9 million Chromebooks sold during 2013, 82 percent were sold in North America, making it the major market for Chromebooks globally. However, in 2014, sales to consumers will account for over half of all Chromebook sales.

While Chromebooks are primarily used by the education sector, they will also have a place in businesses for specific workers, such as staff in banking, financial services, estate agents and hotel receptionists. "So far, businesses have looked at Chromebooks, but not bought many," said Ms. Durand. "By adopting Chromebooks and cloud computing, businesses can benefit; they can shift their focus from managing devices to managing something much more important — their data."

"Now that the PC market is no longer growing strongly, vendors are searching for new business opportunities. They launched Chromebooks to revive interest in sub-$300 portable PCs once the netbook bubble had burst."

And Google competitor Microsoft has never recovered from that bursting of the bubble. Google claims that its Chromebook sales are damaging Microsoft, and they certainly may not be wrong. In the year of Nadella’s ‘cloud first, mobile first’ strategy, Microsoft does seem to be lacking a cloud-orientated device.

But earlier this year, Microsoft revealed that HP, Acer, and Toshiba are planning to launch Windows-powered laptops and PCs, with a price range between $199 and $249 – a price range that does compete on the Chrombook scale.

At the Worldwide Partner Conference 2014, Microsoft COO Kevin Turner noted that several Windows powered notebooks will directly rival Chromebooks.

"We are going to participate at the low-end," Turner told The Verge. "We’ve got a great value proposition against Chromebooks, we are not ceding the market to anyone."

As part of efforts to enable PC makers to reduce their device prices, Microsoft has been regularly trimming down the Windows license costs.

In the midst of Microsoft’s plans for cheaper PCs, Dell has temporarily halted online sales of its only Chromebook, failing to keep up with orders amid rising commercial demand for the devices, with 2.1 million Chromebooks being shipped throughout 2013.

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