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Microsoft could lose billions in sales to Chromebook


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#1 alexalex

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Posted 12 May 2011 - 16:53

......Google, Microsoft Options Compared
Paul DeGroot, principal consultant with Pica Communications, is an expert on Microsoft licensing. I asked him what most businesses pay for Microsoft software and to compare the value against Chromebook and Google's competing cloud services.
"The best comparison would be the Pro Desktop Platform that Microsoft sells to Enterprise Agreement customers," he explains "There's enough overlap here that anyone who went with Google would not go with the Pro Desktop. Microsoft sells millions of these, and they cost somewhere between $300 and $375 a year, depending on volume. They include: Windows upgrade (currently to Windows 7 Enterprise), Office Pro PlusCore CAL Suite (CALs for Windows, Exchange, and SharePoint servers), and a client management license for System Center Configuration Manager."
The math is interesting. Chromebook subscription would be $336 a year, plus another $50 for Google Apps (as I write, it's my understanding that the cloud service isn't included in the laptop price). That works out to $1 a year more than DeGroot's high number. However, he is being conservative in the estimate, and Google's price includes extras, such as the hardware, which Microsoft doesn't provide. That hardware isn't just the employee's PC but dozens, in some cases thousands, of servers that must be purchased, housed, cooled, powered and maintained. Google's cloud would assume most of the per-user infrastructure costs -- money businesses could invest elsewhere.
Even a fairly large business could suffice with one server for managing its Chromebooks. No Exchange, SharePoint, Windows or other Microsoft server products would be necessary. There would no longer need to be costly software qualifications or deployments, since browser-based apps, whether from Google or third parties, would be updated automatically -- and no additional infrastructure would be necessary for deployments. The potential infrastructure savings per user is in the thousands of dollars.
Google's subscription goes further, providing support services, instant cloud service/applications and Chrome OS updates and free laptop upgrades, further removing IT management headaches and costs and assuring that all employees have the newest software. Chromebook subscriptions would do away with the software fragmentation so common in enterprises today -- Office 2003 here, Office 2010 there and Windows XP everywhere.
From that perspective, including hardware and other costs, $376 a year for Chromebook and Google Apps is a helluva bargain, and one likely to take money out of Microsoft's purse. It's my understanding that both subscriptions require minimum 10 Chromebooks, which shouldn't be a problem for enterprises or schools....

How Much Could Microsoft Lose?
So what's the exact risk to Microsoft? Sixty percent of Business (e.g., the Office) division revenue comes from voluming licensing agreements -- the ones most at risk when compared to Google Chromebook/cloud app offering. It's about half for Server & Tools and 20 percent for Windows and Windows Live. Office and Windows are Microsoft's cash cows, generating $9.7 billion in revenue and $5.4 billion in profits during fiscal 2011 third quarter, ended March 31.
"About 80 percent of the Pro Desktop Platform revenue is allocated to those two products," DeGroot says. "So for every customer who pays Google $50 a year for Google Apps, Microsoft could lose at least $300 a year in platform revenue. Considering that Microsoft has at least 40 million customers licensed that way, if Google gets 3 million customers onto its system, which isn't a whole lot, Microsoft loses $1 billion." However, "the Microsoft number is conservative," DeGroot emphasizes, "because I'm basing this on the lowest rate, which only companies with greater than 15,000 computers get."
The Google Apps versus Pro Desktop Platform licensing scenario DeGroot sketches out isn't new. However, Chromebook creates incentive for enterprises to consider their options differently and "could accelerate movement to Google Apps," he says...

http://www.betanews....book/1305159992


#2 NateB1

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Posted 12 May 2011 - 17:02

If most corporations are anything like the corporation I work for, they'll have nothing to do with Chromebooks. Google's online office "apps" are so laughable compared to the functionality in MS Office, it isn't even close. Most of the spreadsheets used by my company contain macros and utilize all manner of of Excel's advanced features - features which simply aren't available in Google's spreadsheet offering. Gmail doesn't hold a candle Outlook and Exchange. Most large corporations also contain custom written business apps, and those apps run on Windows. It simply would not make sense for companies to switch to this, especially since they would lose a ton of functionality and productivity.

#3 Steve B.

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Posted 12 May 2011 - 17:03

Haha no.

I'd rather have a fully featured OS than a web based OS thank you very much. If they were retailed for much cheaper than your average PC then sure, but they're not.

#4 Geoffrey B.

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Posted 12 May 2011 - 17:05

I have a feeling that the chromebooks are going to have the same fallout that netbooks first had when they were released. People are going to see a pricetag rather than features and they are going to buy it, take it home for a few minutes and return it because it does not have whatever feature they were expecting or even a CDrom drive.

#5 episode

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Posted 12 May 2011 - 17:07

Chromebooks are cool and all, but I can't think of a single company that I do IT for that doesn't have some sort of program that requires installation, and can't run web-based. Now, if they could support RDP, that would be slightly different, but still, most cases they don't cut it.

Haha no.

I'd rather have a fully featured OS than a web based OS thank you very much. If they were retailed for much cheaper than your average PC then sure, but they're not.


Yeah, for $200 I'd buy one to play with.

#6 zombieChan

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Posted 12 May 2011 - 17:09

I don't see many companies going to buy Chromebooks... I haven't seen a company switch MS Office to Google Docs (I'm sure there's some, i just don't know of them). The Chrombooks are probably going to be bought and maybe liked by some consumers who only need a web browser. Everyone else will stick with Windows/OS X and MS Office.

#7 Unix2

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Posted 12 May 2011 - 17:10

I have a feeling that the chromebooks are going to have the same fallout that netbooks first had when they were released. People are going to see a pricetag rather than features and they are going to buy it, take it home for a few minutes and return it because it does not have whatever feature they were expecting or even a CDrom drive.

Well the future are tablets, they will the one that replace your desktop and laptop. I am not talking now, but you will see in a few more years. Everything of most of the thing will be cloud based and this will make easier to even work with your smartphone.

#8 Jan

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Posted 12 May 2011 - 17:11

Well the future are tablets, they will the one that replace your desktop and laptop. I am not talking now, but you will see in a few more years. Everything of most of the thing will be cloud based and this will make easier to even work with your smartphone.


Erm no.

#9 Anibal P

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Posted 12 May 2011 - 17:14

These Chromebooks are great for travelling sales people if the company does all it's sales online, other organizations that do Organ donation where they send a rep out and have you fill out an online application, essentially this will be great for any real telecomputing needs

#10 Richard C.

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Posted 12 May 2011 - 17:14

After reading how everything is online and the dependance corporations need to access their files with or without internet access, my response to this is "no Microsoft won't " :p

#11 Ironman273

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Posted 12 May 2011 - 17:18

VLAs are the most at risk? I would think VLAs are mainly in used by corporations, the ones least likely to use Chromebooks. Chromebooks will be good for students and light home users, that's it.

Edit: Then again, seeing who the OP is, it doesn't surprise me that this FUD is being posted.

#12 Samurizer

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Posted 12 May 2011 - 17:28

Why would anyone want a Chromebook?

A decent netbook costs you $300-500, will last a few years, will allow you to do much more than the Chromebook ever will, won’t turn into a paperweight without an Internet connection, and won’t force you to store all your data with Google. Frankly, the only people who’re getting excited about the prospect of Chromebooks so far are the usual freetards buoyed by their wishful thinking that Linux will finally break into the mainstream for desktops.

#13 Flawed

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Posted 12 May 2011 - 17:36

Looks like Microsoft could be in real trouble if ChromeOS + Docs make serious inroads in the enterprise/business sector. I personally think it will be good for competition, and the enterprise sector at least has some choice now.

As an aside, targeting Microsoft's cash cows, Windows and Office, is a smart move by Google. Lets see how long MS can keep throwing billions away on bing and WM7 without any income :D

#14 vetneufuse

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Posted 12 May 2011 - 17:38

yeah right, these things cost as much as a full blown desktop over the course of a year, any smart business is going to see this is just a niche market toy designed for school kids basically not a business productivity system that can run custom apps for their business

#15 Flawed

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Posted 12 May 2011 - 17:44

not a business productivity system that can run custom apps for their business

If you can run your apps in a browser, you can run them on ChromeOS.



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