Google’s Chrome OS Could Destroy Windows

Microsoft (NASDAQ: MSFT  ) CEO Steve Ballmer was once asked about Chrome OS, Google's (NASDAQ: GOOGL  ) cloud-based operating system. It was 2009, and Chrome OS had just been announced. Ballmer laughed.

With Ballmer announcing his retirement, Microsoft remains in a state of flux. Most observers -- including those at Microsoft -- acknowledge that mobile devices have cannibalized the traditional, Windows PC. But tablets don't work for everyone. Does that mean there will long be a need for traditional workstations, and thus, Windows?

Maybe not. As more PC OEMs introduce Chromebook models, and more software heads to the cloud, Chrome OS could eat away at Windows' base of traditional PCs.

Chrome OS vs Windows
In many ways, Chrome OS is far superior to Windows. It's lighter, faster, and impervious to viruses. Chromebooks boot almost instantly, and there's never a need to install software updates. Most importantly, it's cheap. Samsung's Chromebook starts at just $249. Perhaps that's why it's been Amazon's top-selling laptop since January.

Of course, there are limitations to using Chrome OS. As its name implies, it's hardly an operating system in the traditional sense of the word -- it's more or less just the Chrome browser. That means it's incapable of running traditional PC apps.

Software moves to the cloud
That sounds terrible. After all, what's a PC if it can't run apps? Yet, Chromebooks are surprisingly competent. Over the last few years, companies have brought more and more of their software to the cloud, making it accessible to anyone with a web browser.

For example, while Chrome OS can't run Microsoft's Office suite, there's always Office Web Apps, a stripped-down version of Office that can be run right in the browser. At the same time, the growing popularity of cloud-based enterprise apps, like Salesforce's CRM, are easily accessible to business users. Even Autodesk's AutoCAD can be accessed with a Chromebook, assuming one signs up for the company's new subscription plan.

This trend remains in its infancy, but it's one that's likely to grow in the coming years. Keeping software in the cloud has numerous advantages, particularly to the companies that develop it. Even Microsoft would like to see more applications make their way to the cloud -- Windows Azure, Microsoft's infrastructure as a service, benefits from the trend toward cloud computing. It's why hedge fund ValueAct, now on the verge of getting a board seat, invested $2 billion in Microsoft.

PC OEMs backing Chrome
Besides the aforementioned Samsung, other major PC OEMs, such as Hewlett-Packard (NYSE: HPQ  ) and Acer, have introduced Chromebooks, while Asus is planning to sell one later this year.

Asus' CEO said that he believes Chrome OS could be popular among governments and educational institutions, as well as some business users. As demand for Windows PCs declines, Asus hopes its support of Chrome OS will offset that to some extent.

HP is banking on something similar. Last month, HP shares plunged after the company reported disappointing earnings. As one of the largest PC makers in the world, the decline of the Windows PC has hit HP especially hard. Sales of HP's PCs fell a stunning 22% on a year-over-year basis.

HP CEO Meg Whitman has been talking up Google's operating system. As Business Insider's Julie Bort noted, Whitman has avoided mentioning Windows specifically, instead promising to a build a company based around "multiple operating systems." Overall, HP's relationship with Google has been intensifying -- the two announced a partnership in June that has HP selling Google's Apps alongside its own hardware.

Could Chrome OS supplant Windows?
Right now, it might sound like a stretch, but Google's Chrome OS could supplant Windows as the dominant traditional PC operating system. Chrome OS excels in a number of ways, most notably price, but has major limitations.

Because it is more of a web browser than a traditional operating system, users of Chrome OS are limited in the software they can access. Yet, in just the last few months, the popularity of cloud-based software has exploded, and applications as complex as AutoCAD can be accessed with a Chromebook. Meanwhile, PC OEMs, such as HP, are looking to Chrome OS to help them offset the decline of their Windows business.

As a percentage of Microsoft, Windows is still substantial, generating about one-fifth of Microsoft's revenue and one-sixth of its operating income. As mobile devices cannibalize PC sales, most observers might expect the Windows division to shrink further. But that's putting it lightly. Should Chrome OS take off, Windows could fade into total irrelevancy.

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Read/Post Comments (17) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 09, 2013, at 12:28 PM, GameBot wrote:

    Firstly , the answer is No.

    No, chrome is not destroying anything.

    Secondly Chrome OS is under 1% market share.

    let me make that clear, UNDER , and it shares that with a whole bunch of others.

    Yes, I know a vocal few bloggers like to talk it up, but there is very little volume, despite the "amazon" story.

    Even the "failed" WINDOWS8 RT has out sold it.

    So maybe your story should be, "will Windows 8 RT kill WIndows 8.

    OR maybe that just sounds lame....

  • Report this Comment On September 09, 2013, at 12:40 PM, syzygysyzygy wrote:

    I bought a HP with windws 8 $540 took it back next day got an Acer chromebook for $199

    It does all i need it to do and superbly except no Java ( I understand java can be installed but voids warranty and isnt straigtforward and you lose other stuff)plus java has security issues

    all i need java for is a few favorite chatrooms which i can get into in daytime from library anyhow

    good deal

  • Report this Comment On September 09, 2013, at 12:49 PM, Arinamodel wrote:

    the FOOL who wrote this article has no idea about computer technology, Chrome still long way to go, first doesn't have good apps, most os apps are useless.

    Also Google and Apple try use their iTunes store and Playstore to control how users purchase applications and media.

    OS no good apps are useless. look today can you use Google OSs or iOS to do your work, the answer is no.

  • Report this Comment On September 09, 2013, at 12:53 PM, ewro wrote:

    MS has had no problem taking full advantage of it's customers for years. There are millions of people just waiting for a real competitor.

    Also the days of paying hundreds of dollars every few years for a new version are just about over.

  • Report this Comment On September 09, 2013, at 12:54 PM, mchendrix wrote:

    I bought a Chromebook for my wife the other day since her old pc (of around 3-4 years) was starting to have issues. Anyway, I gave $140 tax, shipping and all and got it from Asus via eBay. She really likes it and the only thing she really misses is photoshop but other than that she has everything she needs and it works great.

  • Report this Comment On September 09, 2013, at 12:59 PM, helios987 wrote:

    These "fool" articles make me laugh sometimes.

    iOS would take over before chromeOs ever would.

    So is google going to make drivers for ever peripheral out there? ChromeOS has has much chance of supplanting windows as windows phone has of supplanting android phone. Guys, just stick to what you know best!

  • Report this Comment On September 09, 2013, at 1:09 PM, GaryDMN wrote:

    It's Linux and we have been hearing that Linux would overtake other desktop OS's for way over a decade, yet it hasn't even dented the market. If and when it does take off, this will be pummeled by parent violations, much like Android is on defense now and the companies that commercialize it will be subject to billion in penalties and fines, like Android has and there will still be a long line of lawsuits yet unannounced.

  • Report this Comment On September 09, 2013, at 1:15 PM, rianjones1983 wrote:

    What’s in store for Google’s Android OS with the Expected Ramp-up in NOK Models Supporting Windows @ http://www.earningsimpact.com/Ideaz/18/What%e2%80%99s-in-sto...

  • Report this Comment On September 09, 2013, at 1:30 PM, djtetsu wrote:

    It's pretty much useless as far as content creation (photoshop, film editing, music creation, etc) other than your simple writing of documents.

    Those that are happy with it are those who would've just wanted an ipad with a keyboard (and inexpensive).

    I've looked around in the chrome browser going through their apps and they are all just 'cute' apps but that's about the end of it.

  • Report this Comment On September 09, 2013, at 1:34 PM, mrshoujo wrote:

    No, CHROME OS IS NO THREAT TO WINDOWS.

    Mainly because you have to have an internet connection the entire time you want to use a laptop with Chrome OS on it. It's all cloud-based. No programs are stored on the thing. No wifi or connection, no get to use it. Meanwhile, Windows is stored on your system, works with lots of software that people want. I would not trade off any functionality, I need the software I use and it doesn't work on chrome OS.

    BTW for some of the other comments... Java doesn't have any significant security risks that the common user should be worried about. Just keep your anti-virus up to date and you're good. You read one scare-ware article and you think you know it all. You don't.

    And there is NO WAY crApple's various OSs will ever "take over" because after all, it's still crApple.

  • Report this Comment On September 09, 2013, at 1:36 PM, Robarino wrote:

    Typical Motley Fool article...full of rhetoric, opinions presented as fact, and obfuscated data designed to cover up the truth.

  • Report this Comment On September 09, 2013, at 1:59 PM, TotalLegend wrote:

    One major reason why Google's Chome OS will not ever be fully successful has to do with Google's involvement with the government in undermining private data.

    Entities like the NSA will have complete access to your Chrome OS and everything in it, including every action you performed, giving them far more private information than just your web browsing or emails.

    At least a real Desktop OS, you can take it completely offline.

  • Report this Comment On September 09, 2013, at 2:25 PM, thethreestooges wrote:

    Hey everybody, look!

    Google Chrome is destroying Windows.

    Google Chrome is destroying iOS.

    Hey everybody, look!

    Linux is free and it is destroying Windows.

    Happy now? The truth is,

    Chrome will only becomes mainstream when Google gives away free computers loaded with pop up advertising all over the screen to make up for the cost. They will track your every keystrokes and send you more annoying advertising popping all over the screen as you surf.

    That's Google's business model, that's Google revenue.

  • Report this Comment On September 09, 2013, at 2:58 PM, chrismireya wrote:

    The Google Chromebook is essentially an Android phone with a keyboard.

    I don't need one because I already have an Android phone.

    Moreover, my Windows desktop and laptops are much more powerful, versatile and catered to my needs.

    I can't understand anyone who sings such lofty praises of such a limited piece of technology!

  • Report this Comment On September 09, 2013, at 3:12 PM, jimeikner wrote:

    The Chrome OS is designed primarily as a smart terminal for education, government, nonprofits and small business. That it is currently useful to individual users is almost incidental. But as high speed fiber becomes ubiquitous and more and more developers adopt the Software As A Service internet model, the Chrome OS is uniquely positioned to succeed compared to the existing legacy operating systems.

    I might also note that the distribution of the Chrome OS is also somewhat in flux. True, chromebooks and chromeboxes are only a small part of sales, although they are the only non-mobile sector currently growing, but with the new release of Chrome (previously Packaged) Apps the market has greatly expanded. Within weeks every Chrome Browser, the undisputed industry leader, will essentially be a Trojan Chrome OS system running on Windows, Linux or OS X. The Chrome Browser is receiving all the API's required to run freestanding offline, NaCl and PNaCl apps with hardware access and no permissions required from the host OS. Essentially the Chrome OS just went from sub 1% to almost 50% distribution. Developers are definitely taking note...

  • Report this Comment On September 09, 2013, at 3:46 PM, hawkhell wrote:

    The qualifications for being a writer has dropped or vanished.

  • Report this Comment On September 10, 2013, at 1:37 PM, CharlesClarke3rd wrote:

    Chrome OS is crap. Always will be crap. Windows RT is virus/malware free and lightweight. And cheap (only $30 a license) But only for Retailers.

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