PC sales continue to drop while Chromebook sales rise. Is Microsoft in trouble?

August 13, 2014

Chromebooks Alive PC dead

Microsoft, once the mightiest technology company to walk the earth, has seen some hard times of late, including mounting losses in their Surface tablet/laptop division. On the other hand, manufacturers of the highly portable, laptop form-factor, Chromebook are doing fairly well for themselves.

This is not the first time we’ve reported the growing successes of the very affordable, web focused, Google powered Chrome OS platform, including Chromebooks, Chromeboxes and a few other form factors as well. This is also not the first time we’ve seen that PCs, including laptop and desktop computers, are on the decline. (Even though Microsoft’s Surface is a tablet, it is generally regarded still as a laptop computer.) Despite growing losses, some are of the opinion that Microsoft has an end game here, something that makes the Surface Pro worth while.

Surface Pro

Looking at the numbers, ComputerWorld has determined that Microsoft’s Surface division has wracked up over $1.7 billion in operating losses on the Surface line of tablet/laptop devices. As this number was generated by comparing revenue against cost of revenue, expenses such as advertising are not even included. Surely, with these sorts of losses, and the changes to company focus under Satya Nadella’s leadership, it is time to scrap the Surface line?

While most companies might scrap a project that is nearly $2 billion in the hole, Microsoft may have other ideas. Plainly put, Microsoft has reportedly committed to seeing the Surface project through to an end, they also are large enough to handle, and have a proven track record for accepting, mounting losses on a project to reach their goals. Take Bing for example, which has been around for several years now, but which is only on track to break even and begin turning a profit sometime in 2016.

Is the Chromebook too big an obstacle to overcome?

chromebook Pixel Branding 1600 aa

While Microsoft has been floundering, their normal hardware partners have been finding a new home with Google, running the free operating system Chrome OS. Chromebooks, which are primarily lightweight laptops running Chrome OS, have been working their way into the hands of many. Reportedly shipping over 1 million units in the last quarter alone, placing them well on track to outperform their 2013 sales record of 2.1 million units.

The Chromebook market last year overwhelmingly belonged to Samsung, taking nearly 65 percent of all sales. Acer clocked in at a little over 21 percent, while HP and Lenovo both took home just under 7 percent each. Of these sales, Business Insider reports that 85 percent went to the education sector, and a whopping 82 percent of all Chromebook sales were within North America.

Google-IO-2013-Google Play Education 1600 aa

Set to eclipse the Chromebook sales numbers of 2013, the research firm Gartner predicts that Chromebooks will reach sales up to 14.4 million units by 2017.

The main competitive edge to the Chromebook is its low price tag, but the real value goes beyond the hardware. Consumers are only still getting comfortable with, and understanding the value of, cloud-based architecture, and realizing that they need to spend less time managing devices and more time managing their business and data.

Side by side

While Microsoft took to lowering the price on their first generation Surface RT to just $349, a typical WiFi only Chromebook has always ran in the $200 – $250 range. For the same $349, users can expect the latest Chromebook with mobile data and usually a few hundred MB of free data every month for the life of the machine.

Stepping things up, the Microsoft Surface Pro line has always demanded prices of $700-$800 or more. While Google offers their own branded high-end developer model, Chromebook Pixel, for as much as $1500, this is a single offering, a specialty unit with an unnaturally high price tag. You might say the high price of the Pixel is somewhat the same as Google Glass maintaining its $1500 price tag, except the Pixel costs a little more than $80 to build.

nexus 10 vs microsoft surface

We pitted the original Surface tablet, with its 10-inch display, up against the Nexus 10 a while ago. The results were a bit of a toss up depending on what you need out of your computing experience. Using that baseline, the average Chromebook has a larger display, at 11.6-inches, and much the same specifications otherwise. The benefit to the Chromebook is that Chrome OS is little more than the Chrome browser, as a loose description. The performance overhead and required maintenance of running the full Windows operating system is another beast.

Processors and mobile

While the vast majority of PCs around the globe are powered by an Intel processor, it is important that we, and Microsoft, realize that Intel has made a major shift toward mobile. Intel enjoyed the ride with Microsoft, which has only placed them in a catch-up situation as vendors like Qualcomm, MediaTek and even NVIDIA have shot to stardom developing chipsets on the ARM architecture for Android devices.

64-bit Tegra K1 processor with Denver chip

As ARM architecture requires fewer transistors than the typical x86 architecture used by Microsoft’s systems, Android and other ‘mobile’ devices cost less to build, create less heat and require less power to operate. In fact, mobile technology and the success of ARM processor architecture is deemed responsible for Intel’s 25% net income drop in Q1 of 2013 en-route to total 2013 net income drop of nearly $1.5 billion from 2012.

Intel’s mobile shift has seen to the use of their processors, specifically their lowest end Celeron line, in many Chromebooks. This very article is being written on an Intel Celeron powered HP Chromebook. It is also possible to find a good selection of Chromebooks running on Samsung’s Exynos processor, proving Intel still has some ground to cover to acquire the sort of market dominance they previous enjoyed with Microsoft.

Nokia X -18

Intel is not alone in their shift to mobile. Microsoft took a serious leap into the game by purchasing Nokia’s hardware division last year. Armed with the world’s former largest handset manufacturer, Microsoft has been throwing new phones at various markets around the globe. There was an Android device, called the Nokia X, that was considered a budget device, at best, but Microsoft ultimately put the axe on future Android devices, instead focusing on pushing Windows powered phones.

Having failed thus far to regain any of their former glory, Microsoft’s Nokia has even taken to pumping out devices for as low as $25. The Nokia 130 is purposed for developing nations and areas that are relatively untouched by smartphone technology, but we wonder how far this ‘smartphone’ will take a person, considering it does not come with a network connection.

Conclusions

There are certainly important use-cases that benefit from traditional PCs, more specifically, from Windows OS. However, as the average consumer is spending more and more time in the browser anyway, using Google’s suite of office productivity programs, the Chromebook is proving the more cost effective solution in many situations, especially for education and personal home use.

hp-chromebook-11

The future of PCs and Chromebooks is completely in your hands, we must all decide where to place our hard earned dollars when we next go computer shopping. PCs offer a certain amount of familiarity and a large amount of history and applications support. Chromebooks offer a portability, a freedom and flexibility that many of us are rapidly becoming more familiar with from our mobile computing experiences.

Do you have a PC purchase in your near future, or are you comfortable transitioning to mobile devices and the newer computing concept of the Chromebook?

Comments

  • Shark Bait

    Microsoft has been in trouble for a long time. Apple has been eating away at the premium end of the market, Chromebooks have been eating away at the budget end of the market and tablets have been taking a chunk out of the hole market.
    Chromebooks are a really nice product, however they are only net books at the moment so their potential is limited, when they start to jump to new form factors, more like a laptop Microsoft will really feel the squeeze.
    Mobile, well their only going to manage 3rd place there, despite the billions they’ve sunk into in it. They really need to plug these money holes they have (phone & bing) and focus on remodeling their cash cows (office & windows) before they turn into dogs.
    I think Microsoft look destined to become an enterprise company…….

    • xoj_21

      with the android app support that its getting they gotta get extremely popular.
      i see people trying to get clash of clash run on the computer so they dont eat their phone battery life

    • Vilasanchez

      I think the only thing to keep Microsoft for some time will be gaming on pcs, wich seems to be transitioning to Linux and mac based computing. With Steam OS incoming, I think that lots of dev teams are gonna get a linux or even a chomeOS suport to broaden the market, and Microsoft is gonna lose their market little by little.

  • MasterMuffin

    If price isn’t a problem, Windows laptop > Chromebook any day

    • Shark Bait

      I completely disagree, I chopped my windows in after buying my chrome book, I simply never used it. While a Chromebooks isn’t for everything, it does do a lot of things, and what it does do,it does better than windows.
      I think its a difficult comparison because their different products, but they happen to occupy the same form factor.
      For me, I would never buy another windows laptop, but I have by desktop to fall back on when I need some heavy duty engineering application

      • MasterMuffin

        If we’re talking about budget devices, then sure, Chromebooks are the way to go. I’m talking about having $1500+ money to spare.

        • http://www.androidauthority.com/author/jonathan-feist/ Jonathan Feist

          Enter obligatory: ‘you need a $1500 Windows machine just to run Chrome as fast as a $200 Chromebook can.”

          ( I say this for humor only, don’t hurt me!)

          • MasterMuffin

            Sadly true :D I’ve never tried this on those Chromebooks with 2GB of RAM so I need to ask: how many tabs before it becomes unusable?

          • Shark Bait

            mine doesn’t become unusable, I’ve had 6 you tube videos streaming simultaneously with no lag or stutter.
            My old samsung would give up at 2 tabs, but my acer is a powerhouse (for a Chromebook :P)

          • MasterMuffin

            It comes at some point, but that’s impressive :)

          • Shark Bait

            yes no doubt, but in normal usage its very swift, it’s pretty much constantly refreshing AA, and has every page open in a new tab!
            The Samsung couldn’t manage that, but they’ve come along way

          • http://www.androidauthority.com/author/jonathan-feist/ Jonathan Feist

            What Sharkbait said. My HP laptop with 3GB RAM would bluescreen (Linux equivalent) after a dozen tabs or so. Things slow down a bit on the Chromebook when you fill RAM and it has to move stuff around, but still pretty quick. Biggest thing for this HP 14 is that the processor rarely gets over 50%, so it can clock through and manage where RAM falls short.

          • Shark Bait

            Its important to remember that if the ram is full, it shifts to the SSD which is much much quicker than windows shifting to the HDD. Also chrome system uses much less ram than a windows system, you can almost add another GB on when comparing

          • MasterMuffin

            I don’t understand why the F Windows 8 chooses to shift to HDD by default. Random lag spikes happen for 10-20 seconds while doing stuff like rendering on the background and surfing web. I changed that ASAP when I found out thr reason

          • Cashmay0r

            This is because all the apps that come preinstalled with a Chromebook are unbelievably optimzed for googles OS

      • Jayfeather787

        Install Chrome OS on your windows laptop!!! Or Linux. I installed the full legit Chome OS on my laptop. http://zzsethzz.blogspot.com/2013/02/install-chromium-upgrade-it-to-chrome.html Follow this guide if you want to give Chrome OS on your laptop. On mine, it did not run super well, in that the mouse did not work and the wifi did not work. That’s kinda ironic actually, so I could not stay with it. However, I hooked it up on ethernet and it worked well.

    • http://www.androidauthority.com/author/jonathan-feist/ Jonathan Feist

      I agree with both sides here, when it comes to hardcore computing, I still need a Linux machine (or Windows, whatever), but I have to say, the Intel chip available now is benchmarking equivalent to first gen i7 processors, that’s a pretty good amount of power.

      • MasterMuffin

        Power to do nothing, because that’s what Chromebooks do :P

        • http://www.androidauthority.com/author/jonathan-feist/ Jonathan Feist

          Burn!!!!

    • Jayfeather787

      Linux > Everything

      • MasterMuffin

        Chocolate pudding > Linux

        • Jayfeather787

          Yeah you got me there.

        • smokebomb

          Ass and titties > everything

        • Cashmay0r

          Dota 2 > Chocolate Pudding :P

          • MasterMuffin

            Hell no

  • http://zorgplanet.tourism.com Spaceman spiff

    oh come on,chrome books can never create any trouble for windows,they are just no match,on the other side microsoft is having problems because of apple.and their own mistakes.

    • http://www.androidauthority.com/author/jonathan-feist/ Jonathan Feist

      Hey Spaceman Spiff, speaking for myself alone, I have several Windows and Linux laptops that are just collecting dust, Chromebook has been rocking everything I need for a while now. Not to pretend that I can hardcore game, or code, or process videos, or… on this thing, but it is doing me very well. I know at least a dozen people in my world that do not need anything more than Chromebook has to offer. I think Microsoft has some trouble here.

      • http://zorgplanet.tourism.com Spaceman spiff

        well,chromebooks suffice for decent web browsing and smooth experience,but games movies etc. u need a mac or windows

        • http://www.androidauthority.com/author/jonathan-feist/ Jonathan Feist

          I am not displeased with the video and music playback on this thing either. But you are right, it is good, not great.

        • Cole Raney

          Forget Mac. If you play a lot of PC games ONLY Windows can suffice. Especially if you want to play on the highest settings.

          • SPM

            Windows laptops in the Chromebook price range will certainly won’t run games.

          • Cole Raney

            No. They won’t, unless you are talking the chromebook pixel. That is such a strange device though.

          • SPM

            Having said that, the forthcoming Acer 13 Chromebook certainly will have the power to do 3D gaming. Its ARM based quad core processor is intermediate in performance between the current Intel icore 2955U Haswell Celeron processors and the Intel i3. However its graphics performance is way in excess of anything Intel’s integrated graphics can do (even the high end Macbook Airs) – better than the PS3/XBox 360 consoles in terms of both CPU and GPU, but less than the PS4/XBox One. The 11″ model with 2GB RAM is slated to go on sale for a similar price as the other 13″/14″ Chromebooks are selling for now.

            http://www.gamespot.com/videos/nvidia-tegra-k1-demo-unreal-engine-4/2300-6416733/
            http://www.phoronix.com/scan.php?page=article&item=nvidia_tegrak1_preview&num=3

            Suffice to say, it won’t run Windows, unless Microsoft decides to braing Windows RT back from the dead.

      • Shark Bait

        I completely agree, I use mine all the time, and I sure it would suite everyone in my family fine (my mum often steals it because its so simple to use) .
        Unfortunately I still have to switch to windows for engineering applications and coding, which is where i think Microsoft will hang on, the enterprise market.

  • thomas sim

    As IT professional, Windows OS is a must in my life. However, realizing that what I did at home are simply spending 90% of my time on Chrome, while remaining are photo editing and watching video ( both which could be done easily on other OS such as Android or Chrome OS ).

  • willquan

    My college and I assume many others still runs windows, I use Windows all the time as I need cfd software for flow sim say over naca airfoils as well as wolfram Mathematica, matlab, maple…., etc. I intend to purchase another win. based comp later as my spectre 13.3 has almost depleted it’s storage.

  • Michael Hall

    My last two purchases have been Chromebooks. The HP 14 inch model is perfect for just about everything I do. I accept that for some users, Windows still offers the only solution in terms of software but for the user who mainly uses email, internet, photo galleries, music libraries, social media etc, the Chromebook is superior.

    Boots in less than 7 seconds – what’s not to love! I can boot my Chromebook and deal with all my email before my Windows 7 laptop has finished booting!

  • JPerry

    Well.. unless I can do debugging on Unity3D Editor or Visual Studio using Chromebooks..
    I’ll stick with Windows 7 a bit longer.
    I use AMD APU and love it’s HSA model, similar to those mobile SoC

  • arcwindz

    For browsing and office use, chromebook is a no-brainer. Other things, well, you still have a lot to do chrome!

  • JayMars84

    It honestly seems no one needs Windows except for students and content creators. And even with that, Apple is succeeding, as usual, in selling less for more with the MacBook (not saying they’re bad, just unjustifiably expensive).

    Speaking of Apple, they and social media have caused people to realize that most of us are content consumers, not creators, and have no aspirations tech wise beyond Facebook and Instagram. The metro side of Windows just isn’t there yet. And no one wants to buy a new Windows when the only new thing is a Metro interface no one likes, nor do they wanna use the Desktop side on a touch interface. I have a Windows tablet and I’m thinking about the Nexus or Shield tablet because the hardware is so good, Android is the most advanced touchscreen OS, and I know I can remotely connect to Windows on my HTPC in the offchance there’s something I can’t do in Android.

    As far as Chromebooks being useless without the Internet, the fact is most people have no interest in offline computing anyway.

    • Andrew T Roach

      $799 for 11 inch MacBook Air with 12 hrs of battery life. Student discount.

  • The Breaker

    Chromebooks look nice, as far as web-browsing goes. But i need to know can a chromebook handle 60+ tabs in 3+ windows o.O

  • AS

    The only thing wrong with the surface line is the price.

    Having said that, I think windows could quite easily be come redundant if a small hand full of developers ported their applications to linux/android/chromeos/ios etc…

  • Jayfeather787

    DIE MICROSOFT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! LINUX IS THE FUTURE!!!!!!!!!

  • Will S.

    Windows PCs have simply been oversold. People really didn’t have a choice but to buy a Windows PC for their computing needs, but now they have choices, be it ChromeBooks or tablets or smartphones. I expect to see PC sales declining even more over the coming years.

  • McHale72

    LOL at the click bait headline. Chromebooks are like 2 steps removed from an etch-a-sketch. EVERYBODY has a windows machine and always will (for quite a long time). Business won’t be doing any of their work on a Chromebook or an iPad. Well, not real businesses.

    • Brett Dickstein

      All depends on your business. If all you have to do is track sails, answer emails, etc. there’s no reason a chromebook can’t be used for that

  • Curtis Quick

    I know I’m in a minority here… but I got myself a Surface Pro 3 to replace my laptop and it’s great! My favorite part is going to meetings, detaching the keyboard, and using the built in pen to draw and take notes. It’s really fast and handy. It does cost a pretty penny but so did the laptop that it replaced. Now I no longer need to purchase a tablet and a laptop, I have both in one light but powerful device. It works well for me.

  • teralgoe

    Good advertorial!
    To be honest, I could switch to chromebooks for basic computing, but what deterrent me is the preinstalled spyware and malware called google.

    • Brett Dickstein

      you really think you’re better off with windows or OS x?

  • Andrew T Roach

    Mac switchers never go back to Windows.

  • Groud Frank

    Chromebooks just isn’t an option for me. I am learning Java, C, C++ and Python and I don’t think there is a single decent IDE or dev tool that I need. I currently use Linux as my only OS but run to my sister’s Windows Laptop when I need to use tools for rooting and flashing. The build quality and physical storage are also deal breakers.