Google Helps Make Chromebooks More Profitable

Google partners say a change in Google's Chromebook licensing options will make selling the low-priced laptops more profitable and push the cloud-centric devices beyond the education market.

Google unveiled a $50-per-year Chromebook for Work subscription option earlier this month. The licensing scheme differs from Google's previous option for commercial customers that required a one-time fee of $150 per device for access to Google's Management Console for managing Chromebooks.

"It's a better margin and creates real incentives for Google partners to grow their business outside the education space," said Allen Falcon, CEO of Cumulus Global, a Westborough, Mass.-based cloud-focused Google partner.

Google Chromebooks, made by a variety of OEMs including Acer, Dell and Hewlett-Packard, have sold extremely well over the past several years. However, Google has struggled to see much commercial adoption of Chromebooks.

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For Google partners selling into schools, the licensing fee is a one-time charge of $30 per device for access to Google Management Console. In the past, partners say, Google's $150 licensing for each commercial deployment of a $250 Chromebook added a 40 percent sticker shock, bringing the total to $400. "With licensing fees Chromebooks were priced about the same as some Windows notebooks, making it hard to compete," Falcon said.

Google partners can still choose the one-time $150 per-device license that is good for the lifetime of the Chromebook. Or they can choose the $50 per-device annual license that can be transferred to replacement Chromebooks. Google partners say they prefer the new Chromebook for Work option because it creates a recurring revenue stream vs. a one-time fee.

Affordability of hardware and ease of management have been the hallmarks of Chromebooks, said David Hoff, senior vice president of technology at Cloud Sherpas, an Atlanta-based cloud solution provider specializing in and Google Apps implementations. The new licensing option helps partners drive the affordability message to customers.

Cloud Sherpas, Hoff said, is on track to sell more than 100,000 Chromebooks this year with nearly three-quarters of those sales to commercial businesses.

"We have seen an enormous increase in the number of Chromebooks we sell," Hoff said. "Our goal over the next two years is to bring the number of Chromebooks and annual management licenses to over 1 million."

Chromebook shipments increased by 67 percent quarter over quarter, ABI Research reported this week. ABI expects that year over year, Chromebook shipments will double.

When compared with the larger PC market, Chromebooks still only make up a tiny fraction of PCs sold. However, in certain segments Chromebooks are making impressive gains. According to ABI Research, Chromebooks represent 5 percent of notebook sales and almost 20 percent of the sub-$300 category.

"There are a lot of indications that Chromebooks will continue to move into the enterprise space," said Rajani Singh, senior research analyst at IDC.

Because with Chromebooks applications reside in the cloud and not on device, companies don't need to comply with HIPAA privacy and security rules for each specific device, according to Singh. The Google Management Console also simplifies deployment, management and application management, making it ideal for IT managers who need granular control over a device.