Sales of Chromebooks will exceed 5 million this year, meaning the low-cost, simple-to-use laptops will account for about 2% of all personal computers, Gartner forecast on Monday.
So Microsoft, which has dismissed Chromebooks as unworthy of the name "notebook" -- and in the process has caused some people to wonder why it deigns to acknowledge the upstart -- may be right to hammer the rival platform. While Chromebooks will remain a niche player, sales of laptops powered by Google's Chrome OS will almost triple to 14.4 million by 2017, said Gartner.
If that prediction comes to pass, Chromebooks would represent 5% of all personal computers expected to sell in 2017, nearly the same as the Mac's current market share.
For 2014, Gartner projected Chromebook sales of 5.2 million units, up 79% from 2.9 million the year before. As was the case last year, the vast bulk of this year's Chromebook sales will be in the education market, notably in the K-12 segment.
"The notebook market is not doing well, so OEMs are trying to find a solution," said Isabelle Durand, a Gartner analyst, in a Monday interview as she explained why Chromebooks were making small inroads. "After the netbook market collapsed, they've been looking for a solution, a solution to the price [problem]."
The personal computer business has been in a slump -- shipments have declined for nine consecutive quarters and counting -- and netbooks are just a faded memory. Netbooks -- cheap, lightweight, underpowered Windows laptops -- stormed into the market in 2007 but sales of the sub-$300 devices peaked in 2009 when they captured about 20% of the portable PC market. They then fell by the wayside in 2010 and 2011 as tablets assumed their roles and prices of more-powerful, larger-screen laptops started to fall to nearly the same level as netbook prices.
Chromebooks have sometimes been called the successor to netbooks, partly because of their low prices (several models list for under $250, and they're often discounted to less than $200), partly because of their simple-to-use pitch and partly because of their smaller screens.
With the expected increase in Chromebook sales over the next several years -- and a flat, at best, PC market -- the hardware will steal share from Windows notebooks or, in some educational settings, tablets like Apple's iPad. The former scenario is what has Microsoft concerned.
"Microsoft should not ignore the Chromebook market. They're priced low, they're easy to manage," said Durand.
Once-stalwart Microsoft partners, including Lenovo, Hewlett-Packard and Dell, have all dipped toes into the Chromebook waters, a move they would not have dared to make three years ago. That speaks, more than anything, to Windows' current weaknesses, including licensing costs and the pushback against Windows 8.
Analysts like Durand remain bullish on Chromebooks' chances of expanding beyond the education market, a development that would further complicate Microsoft's life, and the lives of OEMs sticking with Windows. Durand cited several specific cases where Chromebooks could be used in business. For example, real estate agents and hotel receptionists might find that they prefer Chromebooks to PCs, he said.
Ezra Gottheil, an analyst with Technology Business Research, agreed. "Chromebooks have a future in business," he said. "Their near-term future is as location-specific devices, where someone doesn't need the complexity of Windows but does need a keyboard."
Microsoft certainly sees Chromebooks as a threat, even at their current low shipment levels. The company has run anti-Chromebook advertisements, of course, but more importantly, last month it pledged to "redefine the value category" with laptops as inexpensive as $199.
That low-price strategy will be driven by several initiatives, including Windows 8.1 with Bing, a free or heavily-discounted Windows license, and an already-made tweak to Windows 8.1 that enables the operating system to be shoehorned into devices with as little as 1GB of system memory.
"Microsoft does see a kind of threat from Chromebooks, and their low-cost notebooks plan is meant to compete with Chromebooks," Durand confirmed.
How much of a threat Chromebooks pose is unclear: 5% is, well, 5%, and Microsoft's Windows revenue stream is already declining because of the downturn in new PC sales. But then again, 5%? That seems unlikely to really put Microsoft in a pinch.
Durand seemed to agree, dubbing Chromebooks a "niche market" even with sales expected to grow over the next five years.
Google might be able to boost sales even more if it expanded distribution. In 2013, 82% of the Chromebooks sold were to North American customers. In Europe, said Durand -- who is based in France -- Chromebooks are "very limited." And they're also sold primarily to consumers in Europe, unlike in North America, where 85% of last year's devices went to education.
"It's possible that 2014 sales will be higher than our current forecast," said Durand, "and that the consumer market could play a part." She cited higher-than-expected sales in the second quarter and Dell's Chromebook 11 as data points supporting her qualified optimism. Last month, the Texas PC maker stopped selling the laptop through its online store, citing "strong demand." Dell has not yet restored the Chromebook 11 to the store.