WPC 2014: Microsoft's Chromebook Counterattack

Microsoft will compete on price

Paul Thurrott

July 15, 2014

7 Min Read
WPC 2014: Microsoft's Chromebook Counterattack

With Microsoft's embrace of alternate platforms in this "mobile first, cloud first" era, I was curious to see how the firm would respond to Google's surprisingly solid Chromebook at its Worldwide Partner Conference. What we got was a just a bit more detail to the understood strategy of countering Chromebook with low-cost Windows-based laptops. But I'm wondering if there isn't more to this story.

Back at Build in April, Microsoft's Terry Myerson revealed two things which, honestly, are only still partially understood. First, Windows would be free—sorry, would come with a licensing fee of $0—on devices with screens that are 9 inches or smaller in size, including phones. And second, the firm would offer a new version of Windows, called Windows 8.1 with Bing, which would be offered—we think—much more cheaply than the traditional Windows 8.1 "Core" version. (And would of course be free on those devices with smaller screens.)

It's very clear that Windows 8.1 with Bing is aimed directly at Chrome OS and, in particular, Chromebook. That's because, like Chrome OS, Windows 8.1 with Bing is preconfigured with the OS maker's Internet search engine as the default. And it of course targets low-cost machine: Most Chromebooks cost in the $200 to $350 range today.

Opinions differ on how successful Chromebook really is. Adherents to the system will point out that various Chromebooks have dominated the Amazon portable computer best seller list for the past year, which is certainly a valid enough data point. And critics will point to recent industry data that suggests hardware makers will sell only 3.3 million Chromebooks this year, good for just 1 percent of the market for PCs.

I have my own opinion of Chromebook, as you know, but it's important for you to understand that my assessment of this system has grown more positive as Chromebook has evolved. That is, Chromebook is no longer a laughing stock—and, yes, at first it very much was—and is now rather a very viable alternative to a PC, especially for those who spend more of their time with a smart phone and/or tablet and only need the keyboard/mouse functionality of PC and its advanced but complicated productivity applications occasionally. Put another, in a world in which the PC was the primary/only form of personal computing, the Chromebook would barely rate. But in this mobile first, cloud first world, the Chromebook is hitting a sweet spot.

Regardless of opinions, too, it's even more important for you to understand that Microsoft takes Chromebook seriously. Seriously enough to do something it's never done before: Offer Windows for free (or at least for much lower cost, depending on the device). That it is doing so for inexpensive devices—where mini-tablets and Chromebooks are eating into Microsoft's one remaining dominant hardware market—is not coincidental.

So we had a rough understanding of Microsoft's approach to Chromebook as far back as April: Provide hardware makers with a trusted and understood Windows product for free or for very low cost, allowing them to build laptops and similar devices that can compete with Google's mobile platforms (both Chromebook and Android) ... on price.

And that's the important bit here. Microsoft made the "hard decision"—as it called it—to make Windows available for free. But when it comes to countering Chromebook in particular, that is pretty much all it can do, try to meet Chromebook on price. Unfortunately, what it can't do is match the simplicity of Chromebook.

We'll have to wait and see to find out whether this is an issue. The pro-Microsoft crowd will argue, correctly, that Windows PCs are more feature-rich and powerful than Chromebooks and give the user much more choice. They will note that you can always run Chrome and Chrome web apps in Windows too, and that the flexibility of doing so alongside full-featured Windows desktop applications like Word, Excel, PowerPoint, iTunes, Photoshop and the like—not to mention new Modern apps like Xbox Music, Mail and so on—represent a huge advantage. This is all true.

But what I keep coming back to is a basic truth. Many people—most people, perhaps—don't need any of that stuff. And as the personal computing market evolves, so do people's usage habits. As noted previously, many can get by with a smart phone and/or tablet, actually get work done on such machines. Another group will occasionally need a more powerful device to write a school paper, research project, presentation, or whatever. And for that group, a Chromebook—which is both cheap and simple—will fit the bill. As Chrome OS evolves, that will become true for a bigger and bigger audience.

Some will always need the power of the PC. I'm among them, and so too are you, most likely. But if you look honestly at those around you—your friends and family—and really consider their needs, and not just your desire to project your own preferences on others, well. You can see the problem.

Whether Microsoft's strategy of meeting Chromebook on price is successful remains to be seen. Before getting to the new information we learned at WPC, however, I'd like to ask one more semi-rhetorical question. What if Microsoft embraced Chrome OS as one of the competing platforms on which it provides apps—in this case offline-capable web apps—that connect to its popular services?

Today, you can actually find a few Microsoft apps in the Chrome Web Store, including Word Online, Excel Online, PowerPoint Online, Outlook Online, OneDrive, and Outlook.com. These "apps" are basically just web sites that adhere to certain Google rules, which makes them available through the store and the various Chrome OS launchers. But they're not offline-capable, which is something that would certainly make them—and thus Chrome OS—much more interesting and viable.

During the keynote yesterday, one slide highlighted Microsoft "connecting its services across all devices." It showed, among other things, a Chromebook. And it listed the following Microsoft services: Office, OneNote, OneDrive, Bing, Skype, Lync, Outlook.com, Xbox Music, and Skype Wi-Fi. Some of these are of course sort-of available on Chromebook: You can access Xbox Music from the web, for example. But true offline web app versions of some of these would be quite game changer. It's just a thought.

Anyway, WPC.

In a quick, blink-and-you'll-miss-it moment, Microsoft COO Kevin Turner said that Microsoft would win against Chromebooks, which are limited in all the obvious ways. To do so, it would "redefine the value category" with new low-cost PCs, some which are already available. For example, the Acer Aspire ES1 is available now for $249, Microsoft notes, offering a 2.16 GHz Celeron processor, 4 GB of RAM, a 500 GB hard drive and a 15.6-inch screen. Looking at this PC on Amazon.com, I see a number of other similarly priced and configured PCs, such as the Dell Inspiron i3531-1200BK, HP 15-g070nr 15.6-Inch Laptop, and the Toshiba Satellite C55-A5105.

These are obviously low-end machines, the type of thing one might have described as a netbook a few years back, aside from the large screens. Whether they compete effectively with Chromebook, well that remains to be seen.

But more is on the way, and some of these machines will be both cheaper and svelter. On that same slide, Microsoft highlights a $249 Toshiba device (currently unnamed, I guess) that weighs just 2.4 pounds. It will ship with an 11.6-inch screen and 32 GB SSD and will be available this holiday season.

Mr. Turner also very briefly showed off an HP Stream PC that he said would cost $199 this holiday season. This is a laptop-like device which looks colorful, but little else is known about it. (Some blogs have reported that the Stream will cost $99, but that is incorrect: The $99 price point is for low-end tablets, not laptops.)

There's not much to add here other than we need to wait and see. I keep thinking about reviewing a low-end laptop, something that specifically targets Chromebook, and maybe it's time to make that happen.

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About the Author(s)

Paul Thurrott

Paul Thurrott is senior technical analyst for Windows IT Pro. He writes the SuperSite for Windows, a weekly editorial for Windows IT Pro UPDATE, and a daily Windows news and information newsletter called WinInfo Daily UPDATE.

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