Chromebooks are eating Microsoft's lunch and dinner

A few days ago I wrote a story on why Windows 10 won’t kill Chromebooks, which received some responses that dismissed Chromebooks as a viable competitor. I have also written in detail why a majority of casual PC users, who don’t do film-editing or play video games, don’t need Windows anymore and might be better off with Chromebooks. And I was not wrong.

Now there are concrete numbers to show that Chromebooks are in fact beating the sales of Windows notebooks. Microsoft fans may not accept it, but Microsoft knows how credible a threat Chrome OS is: That is why they ran an anti-Chromebook ad campaign, and why, we presume, they have created strategies to counter Chromebooks. You don’t come up with such plans to mute a non existing threat.

PC shipments are declining in the consumer space as more and more users are moving to smartphones or tablets, which are powered by Google’s Android and iOS. This decline has reduced Microsoft’s market share in the consumer space to mere 14%. But that’s the consumer space. If we look at the enterprise or B2B (business to business) segment, the trend is not that dramatic, but there is a clear decline in PC shipments. What’s interesting is that it was Google’s Chromebook that kept the overall B2B PC and tablet sales from falling, according to a report by NPD Group. “Chromebook sales through the U.S. B2B channels increased 43 percent during the first half of 2015,” the report said.

Such market reports should be taken with a grain of salt. But The NPD Group, a market research company that uses actual sales data from retailers and distributors as well as consumer-reported purchasing behavior is reputed for their reports.

The study further stated that "Chromebooks have maintained their education season buying momentum with sales up 38 percent over 2014 and, for the first time, exceeding sales of Windows notebooks and passing the 50 percent market share threshold through B2B channels during the June and early July period."

Yes, you read it right, Chromebooks have overtaken sales of Windows notebooks. As you can see in the graph below, Chromebooks seem to be nibbling at both Macbook and Windows market shares: Windows' share decreased from 66.2% in 2013 to 59.3% in 2015, whereas Apple's share came down from 19.2% to 10.3% in the same period. Meanwhile, Chromebook's share went up from 14.6% in 2013 to 30.3% in 2015.

Another subtle, but stronger, message that came out of the report is that businesses seem to be sticking to the tried and tested PCs (a term that now includes desktops, notebooks, and Chromebooks) after flirting with tablets. While the sale of notebooks in each segment is growing, thanks to Chromebooks, the sales of tablets have declined, though the pace of decline seems to have slowed. The point being: Tablets are not going to cannibalize PCs.

Baker said, "All these results continue to point to strong channel demand for PCs and continue to belie the notion that any other devices are threatening the long-term business case for the notebook."

Detractors dismiss the rise of Chromebooks stating they are getting popular only in the education segment. Doe this segment matter There is a reason why even Apple offers special pricing for students and the education sector; there is a reason why companies like Microsoft and Adobe offer much lower rates for students.

The reason is: get them young.

Once you get used to certain products, once you get locked into the ecosystem during your school days, you are less likely to switch products when you "grow up". Not only you will remain a user of that product, but if you become influential figure within your organization, you will bring that product to the organization. If you are a creator, you will focus exclusively on that platform. In a nutshell, getting them young pays off long term.

Those who dismiss Google's growth in the education system seem to be unaware of the huge and lasting impact of it.

Google has started to bring Chrome OS and Android closer. And with the head of Chrome OS and Android, Sundar Pichai, CEO of the new, slimmed down Google, there's a good chance that the company will become more aggressive with Chromebooks.

I bang this drum often, but I really do believe that once Photoshop arrives on Chromebooks it will change the market dynamics to a greater degree. And it means only one thing: further growth of Chromebooks.


Swapnil Bhartiya

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