Chromebooks Accelerate

“Acer has seen booming sales of Chromebooks, including government procurement orders for educational purposes in many countries, and therefore has asked supply chains to increase production to reduce supply shortages, according to company CEO Jason Chen, adding that global Chromebook shipments in 2014 are expected to increase 70% on year.” It’s the netbook all over again. This time Wintel is cutting prices in a big way to try to keep up but the cat’s out of the bag and won’t return. The whole world, OEMs, developers, retailers and consumers know FLOSS works for them and even businesses are buying up Chromebooks. Add this to the tsunami of smartphones and global growth of FLOSS on */Linux looks to be huge.
Think 0.2% of installed base is nothing? Consider that happened in about a year. If there are 1.5billion PCs in the world that comes to 3million units in one year. Will cutting the price of Wintel stop that from doubling this year? I doubt it. While the low price of Chromebooks is appealing, the reliability and ease of use are also important. Further, Chromebooks also have room to drop in price. The most popular notebook on Amazon.com is the Acer 720 Chromebook which was just reduced in price to $179. Can Wintel cut its prices in time to have any effect? I doubt it. Acer and others are maxed out now. By Christmas they will be breaking out.

See Acer sees booming sales of Chromebooks, says CEO.

See also, Why Chromebook Sales Are Surging in Schools, Enterprises

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
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15 Responses to Chromebooks Accelerate

  1. dougman says:

    “The popularity of Chromebooks has finally gotten to Microsoft. The company has hit the panic button in a big way by launching a site that compares Chromebooks to Windows laptops in a desperate attempt to put a positive spin on its products while portraying Chromebooks as limited devices.”

    http://windows.microsoft.com/en-us/windows-8/compare-chromebook

  2. dougman says:

    All one can do is point, smile and laugh.

    First M$ tried the scroogled ads, which just became free advertising and failed to do what they set out to do.

    Now, M$ is lowering prices to match, showing the world that such devices could be had for $200.00.

    Every move M$ makes or tries to make, Google has them check’d.

  3. M$ borrows here to avoid repatriating money earned there to avoid income taxes… OTOH, they have been installing a lot of servers to run their cloud…

    As of June 30, 2014, they list cash and cash-equivalents as $85.709billion and short and longterm debt as $22billion. (Hmmm… no 10-K or 10-Q yet…) There might be a tax-hit for repatriating cash but it’s not life-threatening. OTOH, the client division is shrinking despite replanting XP. The world is sorting itself out into hopelessly locked in and free categories. Most of the world is free to choose an OS these days rather than to have it imposed by M$ and “friends”.

  4. ram says:

    With respect to financials and debt:

    Debt has always been a risky time-bomb, and no more so than today. If interest rates move up just a bit (which they will) companies that have less “cash” than debt will go under.

    Microsoft has long been called “the Enron of the IT industry”. I suggest you look at their financial ratios and derivative exposures VERY carefully.

  5. oiaohm says:

    http://markets.ft.com/research/Markets/Tearsheets/Financials?s=2353:TAI
    DrLoser its not hard to look at Acer financial. Acer has enough cash they could straight up pay out their debt right now. MSFT on the other hand would have to sell assets to clear their debt.

    Acer issue is some how making enough profit from the 400 Billion revenue they bring in. Acer is still operating like when they were a 600 billion income company. ASUS another company from the same region with more staff and same income can still bring in profit.

    Debt is most of these TW companies is less than cash. A share that debt is larger than cash TW investors are not interested.

    DrLoser growing debt claim is bogus. Stable debt is current status. Microsoft almost has the same amount of long term debt as Acer. Remember Microsoft has way less income than Acer.

    Acer need to move their margins by about 10 percent. Also rapidly moving south is also a fairly much a lie. Acer is only really slowly moving south at this stage due to the size company. And that slow moving south could be stopped by a restructure. Yes the numbers of like 20 billion soulds like a lot but that is small compared percentage. 400 billion income 20 billion is a 5 percent problem and a 10 percent problem if you want to show a profit.

  6. DrLoser says:

    You really haven’t looked at Acer’s financials, have you, Robert?

    I mean, neither one of us is a financial wizard.

    But only one of us is wearing rose-tinted spectacles.

  7. DrLoser wrote, of Acer, “They’re heading rapidly south on every measure, with the exception of debt”.

    Nope. They’re under new management and headed in the right direction now. If they stopped selling Wintel PCs their margins would be huge. Perhaps M$ will pay them to stick with Wintel. Do the maths. Their margins are near $0 for a Wintel PC but would jump by ~$50 for the typical desktop/notebook. This is why M$ even cares about Chromebooks.

  8. dougman wrote, “I can see Chromebooks going for $50 in short-order, perhaps a few years time”.

    Netbooks, perhaps, but the bigger ones still have material, labour and shipping costs which increase with the size of the device. There is some lower limit. There is a theory that when prices reach rock bottom only one player will be around selling cheaper than others by economies of volume but that’s not the case with computers that ship by millions. Anyone who ships millions has economies of volume. A million is a lot. In a market with 100s of millions shipped annually, there is room for diversity and competition. That’s how markets go when there’s no M$ pulling the strings.

  9. DrLoser, smug as ever, wrote, “What’s the OEM margin on a $50 white goods FMCG thing with a lifetime of five years? $2?”

    That’s how things were in the days of Wintel. M$ got top dollar and the OEMs got peanuts. With M$ out of the way, the OEMs are getting a much bigger margin. That’s why Acer is expanding production rapidly, because it pays, big time. Get Intel out of the way and OEMs will laugh all the way to the bank. Wintel is making a desperate last stand here.

    According to DrLoser’s theory, Samsung will be the only winner in smartphones but in fact, Samsung is losing share and a multitude of others are getting a slice of the pie.

  10. DrLoser says:

    Which rather reinforces my point, Dougie, doesn’t it?
    What’s the OEM margin on a $50 white goods FMCG thing with a lifetime of five years? $2?
    (See also the fact that, according to Acer themselves, their margins were heavily eroded by the cost of components.)

    Let’s be insanely optimistic (I love to be one of the crowd. It is how this particular crowd right here works) and assume that every single current owner of a “legacy PC” buys a Chromebook.

    That would be, according to Robert’s figures, and I have no reason to doubt them, 1.5 billion multiplied by $2. (You can ask a friend, Dougie. You probably have a friend who knows how to use a calculator. Maybe even one you can trust.)

    $3 billion in one go! Ker-Ching!

    And then peanuts for the next five years. Not sure how you’d tool up a production line to do this and still make a profit.

    And that assumes that you, the OEM, let us call the OEM ACER for the sake of argument, although you can pick any one of them, say Samsung to be slightly more realistic, sells every single one of those Chromebooks.

    To quote a beloved song by the late Tammy Wynette:

    M-O-N-O-P-O-L-Y …

  11. dougman says:

    I can see Chromebooks going for $50 in short-order, perhaps a few years time.

    Desktop PC’s have a typical life-cycle of 3 years, with Chromebooks and such, that barrier is smashed and you have a device that will last you a VERY long time and will always be updated.

    The CR-48 was the very first model released in 2010 for public use and there are some that are still in use to this day.

    So a life-cycle of 5+ years or more is not uncommon now form Chromebooks.

  12. DrLoser says:

    I don’t suppose you’ve taken the time to examine Acer’s financials recently, Robert?
    They’re heading rapidly south on every measure, with the exception of debt, which has stabilised in absolute terms. (Their debt to capital ratio jumped from 18% in 2012 to 25% in 2013.)
    I’d hold off on buying that $179 Acer Chromebook if I were you. Give it another six months, and you’ll be able to pick one up in a bankruptcy fire sale …

  13. dougman says:

    That is a fair assessment of them; when reinstalls and reboots are the way to fix their software, you know that this is not a long-term viable solution for people and will jump at the chance to use something different.

    M$ as a company is destined for failure. The Redmond behemoth seems well along this path not merely because of management’s breathtaking ineptitude, lack of vision and obliviousness to the needs of customers, but also because Windows has accumulated layer upon layer of buggy code atop an architecture that was never meant to handle a thousand patches, updates and iterations.

    How bad has Windows become? So bad, in fact, that the latest version, Windows 8, has almost single-handedly killed off the PC business. With tablets on their way to becoming ubiquitous, PC and laptop sales were already falling sharply. The last thing in the world that Dell, Hewlett-Packard, ASUS, Lenovo et al. needed was a new version of Windows that almost no one wanted or needed.

    Dumping version 8 on the market, was the final straw for many of people.

    No one wants it..

    Windows 8 can only continue to garner negative press and the hostility of users everywhere. It were as though General Motors had introduced a jazzy new Chevy that lacked a “traditional” steering wheel, had a radio that played only hip-hop music, and brake and accelerator pedals whose positions were reversed.

    These days, people want mobile devices such as smartphones, tablets and Chrome devices, and M$ trails in these markets.

  14. oe says:

    Microsoft has acquired the same taint that American car manufacturer’s had in the late 70’s: overpriced, unreliable, maintenance headaches, not in tune with the driver’s needs. ChromeOS, Android, and GNU/Linux share the enviable perception of consumers that Japanese cars had by the mid-80’s. Apple to a lessor extant within the critical future demographic group of youth whom will be in the workforce within the decade has picked up the perception of Jags from that 70’s/80’s era as well: way overpriced, under-performing, the perception that the users whom use them are mainly about the image and not the substance…not a great position to be in either.

  15. dougman says:

    Wait till ChromeOS and Android merge, then the things will explode to the moon.

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