When Asus announced that they would be releasing a $179 desktop running Google’s (NASDAQ: GOOG) Chrome OS starting March, the tech world took notice. Not only because it would be one of the cheapest entry-level desktops available, but it was also running the Chrome OS.
This must be disheartening news to Microsoft (NASDAQ: MSFT), as the once mighty tech titan struggles to retain relevance. The company’s presence in the smartphone and tablet market, a rapidly growing tech sector, has been noticeable minimal. Their foray into search engines with Bing.com has yielded underwhelming results. Now, Microsoft’s Windows OS, the most dominant operating system on the market, is now under assault.
Why does it matter now?
The Chrome OS has been available for some time, as computer makers like Samsung and Hewlett-Packard (NYSE: HPQ) have embraced the software in their products. So what makes Asus’ announcement shocking? Of course, it comes down to economics. The price of $179 is well below any desktop running Windows, given that Microsoft demands a licensing fee for using their OS, while Google offers the Chrome OS for free.
The low price means it has mass market appeal. This of course translates into mass market exposure for the Chrome OS. While the Chrome OS represents only 1% of the PC market, that statistic does not paint a complete picture. In 2013, nearly all major PC manufacturers have adopted the Chrome OS in some form.
Of the top three best-selling laptops sold on Amazon (NASDAQ: AMZN) this past holiday season, two used the Chrome OS. Educational institutions are especially receptive to Google’s lean, web-based operating system, as about 20% of laptops run the OS in U.S. schools.
What does this mean?
While Microsoft offers a product that allows local software to operate without internet connectivity, the increasing availability of wifi and reliance on internet access nullifies this advantage. Many businesses are shifting to cloud-based platforms for company software, further reducing demand for the function.
There are obstacles to Chrome OS growth, namely the commitment and familiarity of users to the Windows OS, but the platform is only getting better. To analysts, the Chrome OS represents the most dangerous threat to Microsoft’s dominance in the PC market.