Microsoft could lose billions in sales to Chromebook

[alexalex]

......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.com/joewilcox/article/Microsoft-could-lose-billions-in-sales-to-Googles-Chromebook/1305159992

[NateB1]

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.

[Chasethebase Reporter]

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.

[LittleNeutrino Veteran]

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.

[episode]

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.

[zombieChan]

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.

[Unix2]

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.

[Jan Veteran]

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.

[Anibal P]

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

[cooky560 Veteran]

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

[Ironman273]

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.

[Samurizer]

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.

[Flawed]

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

[neufuse Veteran]

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

[Flawed]

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.

[+Warwagon MVC]

If it was $20 sure i'd buy one. But I just looked at how much it was going to cost and laughed out loud.

[Flawed]

If it was $20 sure i'd buy one. But I just looked at how much it was going to cost and laughed out loud.

You can pay $20 a month for one.

[+Heartripper Subscriber¹]

avg people doesn't buy linux pc's because they don't have windows. I guess they'll do the same with chromebooks.

[Solid Knight]

Microsoft could also lose billions to my Crapbook offering. It's only $279 a year and offers advanced text manipulation features.

[neufuse Veteran]

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

yeah, and when all your legacy apps are DOS based? or terminal based? or are windows based? like the majority of them are.... web apps are small in comparison to the number of applicators out there that require a desktop

[zombieChan]

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

What if your web app doesn't work well in the chrome browser, maybe it only works well with IE.

What if your app isn't a web app and requires windows..(not every application people use is a web app, lots of companies need to be able to run these non web apps)

[Phouchg]

It ain't gonna happen. Ever.

Reasons already given by serious people above.

[jakem1]

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

+1

[alexalex]

While IT pros scoff, Google Chromebooks will likely seduce businesses

Google?s Chromebook for Business program could entice a lot of organizations to consider ditching Windows for Chrome OS. Learn why and see how it could save big money.

Most of the IT professionals I know scoff or snicker when I bring up the topic of Google Chrome OS. But, just as IT pros used to roundly dismiss the idea of cloud computing ? and many of them are now climbing over each other to tout their cloud and virtualization expertise ? it might not be long before IT also warms up to Chrome OS, out of necessity...

Google claims that by deploying Chromebooks instead of traditional PCs, companies can reduce the total cost of ownership for business computers by 70%. That?s a whopping number and we?re still trying to figure out where Google came up with that amount, but most of it is based on eliminating PC management tasks ? security, software patches, anti-malware, and OS and software deployment...

A number of companies have already publicly admitted that their IT departments are running major trials of Chromebooks, including the City of Orlando, Logitech, Jason?s Deli, American Airlines, Ruby Tuesday, National Geographic, and others.

In an official statement, Jason?s Deli said, ?The Google Chrome notebooks are almost effortless to manage. Staging, imaging, updating, and repairing software problems are almost non-existent issues at this point. Replacement is as simple as handing out a new device with no IT involvement necessary.?

Based on the early returns, Google said companies can switch 75% of their users to Chromebooks.

?We think this can fundamentally change the way people manage computers in business,? said Pichai....

A lot of IT professionals will still laugh at the idea of Google?s Chrome OS, since most of them would never want to use such a limited system and can name plenty of business users who could never be converted to a cloud machine ? graphics designers, accountants, architects, etc. However, all of those could safely fit into the 25% of users who Google says aren?t candidates for Chromebooks (versus the 75% who are)....

http://www.techrepublic.com/blog/hiner/while-it-pros-scoff-google-chromebooks-will-likely-seduce-businesses/8310?tag=nl.e101

It is quite funny to read the comments regarding Chromebooks (and in the past regarding the failing iPhone, iPad) from Windows (7) users who on one side shout KILL The 10 years old XP and on the other cling to a 30 years old PC concept when the future is cloud (Microsoft just now updated their Web Office) , Tablets, and web PCs.

[DrunkenBeard]

Why would anyone rent a browser ? RENT ... BROWSER ... What exactly are the benefits over installing Chrome (or any other HTML5 compliant browser for that matter) on existing machines ?