Chromebooks may grab 5 per cent of PC market, about the same as Apple's Mac

Chromebooks may grab 5 per cent of PC market, about the same as Apple's Mac

Gartner's forecasts put more light on why Microsoft's dissing Chrome OS laptops

Sales of Chromebooks, the low-cost, simple-to-use notebooks, will reach more than 5 million this year, accounting for about 2 per cent of all personal computers, according to Gartner.

So Microsoft, which has dismissed Chromebooks as unworthy of the name "notebook" -- and along the way made some wonder why it deigned to acknowledge the upstart -- may be right to hammer the rival. While Chromebooks will remain a niche player, sales of laptops powered by Google's Chrome OS will almost triple to 14.4 million by 2017, said Gartner.

That number, if it comes to pass, would put Chromebooks at 5 per cent of all personal computers expected to sell in 2017, near what the Mac has now.

For 2014, Gartner projected Chromebook sales of 5.2 million, up 79 per cent from 2.9 million the year before. The vast bulk of this year's Chromebooks will be snapped up by the education sector, notably K-12, as were those bought last year.

"The notebook market is not doing well, so OEMs are trying to find a solution," said Isabelle Durand, a Gartner analyst, as she explained why Chromebooks were making small inroads. "After the netbook market collapsed, they've been looking for a solution, a solution to the price [problem]."

The personal computer business has been in a slump, nine consecutive quarters of shipment declines and counting, and netbooks -- cheap, lightweight, underpowered Windows laptops -- are just a faded memory. Netbooks stormed into the market in 2007 but sales of the sub-$US300 devices peaked in 2009 when they captured about 20 per cent of the portable PC market. They then fell by the wayside in 2010-2011 as tablets assumed their roles and more powerful, larger-screen notebooks closed in on netbook prices.

Chromebooks have sometimes been called the successor to netbooks, partly because of their low prices -- several models list for under $US250, and are often discounted to less than $200 -- partly because of their simple-to-use pitch, partly because of their smaller screens.

With the expected rise in Chromebook sales over the next several years -- and a flat, if that, industry -- the hardware will steal share from Windows notebooks or, in some educational settings, tablets like Apple's iPad. The former is what has Microsoft concerned.

"Microsoft should not ignore the Chromebook market. They're priced low, they're easy to manage," said Durand.

Once-stalwart Microsoft partners, including Lenovo, Hewlett-Packard and Dell, have all dipped toes into the Chromebook waters, a move they would not have dared to make three years ago. That speaks, more than anything, to Windows' current weaknesses, including licensing costs and the pushback against Windows 8.

Analysts like Durand remain bullish on Chromebooks' chances of breaking out of its educational-only market, which would further complicate Microsoft's life, and that of OEMs sticking with Windows. Durand cited specific use cases in business -- real estate agents and hotel receptionists were two -- as possible wins for Chromebooks.

Ezra Gottheil, an analyst with Technology Business Research, agreed. "Chromebooks have a future in business," he said. "Their near-term future is as location-specific devices, where someone doesn't need the complexity of Windows but does need a keyboard."

Microsoft certainly sees Chromebooks as a threat, even at the latter's low shipment levels. It's run anti-Chromebook advertisements, of course, but more importantly, last month pledged to "redefine the value category" with notebooks as inexpensive as $US199.

That low-priced strategy will be driven by several initiatives, including Windows 8.1 with Bing, a free or heavily-discounted Windows license; and an already-made tweak to Windows 8.1 so it can be shoehorned into devices with as little as 1GB of system memory.

"Microsoft does see a kind of threat from Chromebooks, and their low-cost notebooks plan is meant to compete with Chromebooks," Durand confirmed.

How much of a threat Chromebooks pose is unclear. Five per cent is, well, five per cent, and Windows is already pressed as a revenue stream because of the downturn in new PC sales. But then again, five percent? That seems unlikely to really put Microsoft in a pinch.

Durand seemed to agree, dubbing Chromebooks, even over the next five years as sales grow, a "niche market."

Google might be able to boost sales even more if it expanded distribution. In 2013, 82 per cent of the Chromebooks sold were to North American customers. In Europe, said Durand -- who is based in France -- Chromebooks are "very limited." But they're also sold primarily to consumers, unlike in North America, where 85 per cent of last year's devices went to education.

"It's possible that 2014 sales will be higher than our current forecast," said Durand, "and that the consumer market could play a part." She cited higher-than-expected sales in the second quarter and Dell's Chromebook 11 as data points for her qualified optimism. Last month the Texas company stopped selling the laptop through its online store, citing "strong demand." Dell has not yet restored the Chromebook 11 to the store.

Read more about laptops in Computerworld's Laptops Topic Center.

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