Google's Chromebook Success Bucks PC Slump


The PC industry may be hemorrhaging, but Google's Chromebooks are defying the downward spiral, offering a bright spot for sales of notebooks priced under $300.

Market research firm The NPD Group reports that in the last eight months Chromebooks have grabbed 20 to 25 percent of the U.S. market for laptops priced under $300. Introduced in 2011 the bare-bones Chromebook laptops, which sport their own Chrome OS and run apps via a Web browser, are priced between $200 and $300.

According to NPD, Chromebooks are the fastest-growing part of the PC industry. The under-$300 notebook market is a segment that accounts for about 15 to 20 percent of the overall U.S. notebook sales. Google's success, NPD points out, is in stark contrast with Dell and Hewlett-Packard, which have seen PC sales plummet as the popularity of smartphones and tablets have skyrocketed.

[Related: HP Launches Pavilion 14 Chromebook, Pushes 'Multi-OS' Strategy]

For Stephen Baker, vice president of industry analysis at NPD, the success of Chromebooks comes as surprise. "The first iteration of Chromebooks was nothing special. But over time Google has added an offline component to Chromebooks and began working with the corporate and retail channel partners," Baker said. Those efforts have paid off.

Over the past year Google has tripled its retail presence for Chromebooks. Chromebooks that are now sold in 6,600 retails stores including Best Buy and Wal-Marts. Staples sells Chromebook direct to businesses via its Staples Advantage B2B program. In June Fry's Electronics, Office Depot, OfficeMax and TigerDirect also agreed to start selling Chromebooks.

Part of Google's success has been inking deals with big PC makers such as Lenovo and Hewlett-Packard, which both recently began making Chromebook models. Other traditional Microsoft allies selling Chromebooks include Acer and Samsung. "The entire PC ecosystem is blowing apart from form factors, processors, operating systems and brands," Baker said. "Google sees it as an opportunity to take advantage of the shift."

The biggest channel opportunities are in education, with enterprise showing little interested in Chromebooks, Baker says. But that could change as companies see Chromebooks as viable alternative to tablets, he said. For its part, Google has been trying to warm up to enterprise customers. Google inked a deal with Citrix Systems and VMware to bring enterprise applications to Chromebooks.

Chromebooks, Baker said, are a great companion or alternatives to tablets. "[Chromebooks] offer Google services out of the box, an integrated keyboard and screen, and they don't require extra accessories. That's a great value proposition for a sub-$300 notebook alternative," Baker said.

Under $300 laptops are the fastest growing segment of the PC industry, set to grow more than 10 percent in 2013, according to NPD. However Google's Chromebooks still only represent 4 to 5 percent of the overall laptop marketplace.

PUBLISHED JULY 10, 2013>