Dell's Chromebook is a sign of shakier times for Windows

Microsoft's top 3 OEM partners are now all experimenting with Chrome OS

Dell's Wednesday debut of a Chromebook, an inexpensive laptop that runs Google's browser-based Chrome OS, is a sign that the platform has gone mainstream, an analyst argued today.

Another called it one more clue that long-standing technology oligarchies are crumbling. Both saw it as yet another threat, even if currently a small one, to Microsoft.

"This means that Chromebooks have gone mainstream. If Dell jumps on board, it means they think they're losing business to rivals," said Patrick Moorhead, principal analyst at Moor Insights & Strategy.

He also cited Dell's traditional conservative approach to product introductions as a signal of Chromebooks' growing importance. "Dell sells only those things that people are going to buy, they're not into taking risks," said Moorhead.

Dell's Chromebook 11, which won't ship until January, will be priced at under $300 and will be aimed at the education market.

Dell followed other big-name computer OEMs (original equipment manufacturers), including Hewlett-Packard and Lenovo, into Chromebooks. With the Round Rock, Texas company's jump onto the bandwagon, the world's top three OEMs have all rolled out one or more Chromebooks.

Those three companies, which shipped 46% of the world's PCs in the third quarter by IDC's estimate, are much more closely linked to Microsoft than to Google -- the vast bulk of personal computers rely on Microsoft's Windows -- but the experimentation with Chromebooks has made the Redmond, Wash. developer nervous.

Nervous enough to recently roll out a pair of attack ads that bashed Chromebooks and portrayed them "not a real laptop."

"Microsoft is both concerned about Chromebooks and being proactive," said Moorhead of the ads. "Microsoft is scared about missing another market like they have so often in mobile, so yes, Chromebooks concern them. But they're not going down with a fight."

The downside to Microsoft's attacks on Chromebooks, Moorhead continued, is the side effect: The ads raise consumer awareness of the Google-powered notebooks. But that's a risk Microsoft seems willing to take.

Chromebooks have been strong sellers in some market segments -- education and government to name two -- said another analyst, who disputed Moorhead's contention that the machines, which require Internet access for most tasks and rely on cloud-based services to store documents, files and other content, were ready for mass adoption.

"Chromebooks [sales] are up considerably from last year," said Stephen Baker, a retail analyst with the NPD Group. "They account for about a quarter of the under-$300 [notebook] market in the U.S., and that's where they're going to stay. They will continue to incrementally gain share, but compared to the full PC market, they're not ready to be mainstream."

Baker based his last comment on NPD's belief that Chromebooks were not so much stealing share from Windows-based notebooks as they were from tablets. "That's the interesting part," Baker said.

Nonetheless, Baker agreed that Dell moving to Chromebooks is a portent, and tangentially, a threat to Microsoft.

"It's all part of the general activity of the PC OEMs. OEMs can't sit back and depend on Wintel anymore," said Baker, using the term for the Windows-Intel partnership that dominated the computing industry until tablets, especially Apple's iPad, appeared. "They're using AMD processors, they're using ARM processors, they're using different OSes.

"It's just like Microsoft isn't relying exclusively on the OEMs anymore. It's another sign of the breaking apart of those oligarchies," Baker added.

Microsoft ruffled more than a few OEM feathers last year when it launched its own hardware brand, Surface, which now includes a second generation of tablets and tablet-notebook hybrids. And while its anti-Chromebook ads don't mention OEMs by name, by knocking the platform, Microsoft also knocked those who sell them, including its biggest PC partners.

Some, including Moorhead, expected that Dell would forget about experimenting with Windows alternatives after Microsoft loaned CEO Michael Dell $2 billion to help him take his company private.

Not the case. "It was just a smart investment in a partner," Baker said of the Microsoft loan. "Will Dell continue to be an important Microsoft partner? Of course. Will they be Windows exclusive? No. You need to look at it from that perspective."

Although Dell has said nothing official about expanding its Chromebooks effort into non-educational market, that's a certainty, Moorhead said. "I do expect them to take this into other markets.... There can't be a return on investment from just one market."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

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