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Google Gains Another Ally in Its War With Microsoft

LG isn't known for making PCs that run Microsoft's (NASDAQ: MSFT  ) Windows, but the company is going to start selling one with Google's (NASDAQ: GOOGL  ) ChromeOS. The LG Chromebase is the first all-in-one, desktop PC powered by Google's Internet-dependent operating system.

LG's step into the world of ChromeOS is yet another positive sign for Google's operating system, which has received support from many of Microsoft's longtime hardware partners, most notably Hewlett-Packard (NYSE: HPQ  ) . As Google continues to gain support, Microsoft shareholders have reason to be concerned.

ChromeOS is insignificant -- for now
ChromeOS's share of the overall PC market is tiny. According to IDC's November data, computers running Google's operating system account for just 1% of the worldwide PC/tablet market. Although many PC OEMs have launched Chromebooks in recent quarters, Samsung is the only one to find much success.

There's just one market where Google's operating system is really having an effect: ChromeOS now accounts for about a quarter of the PCs sold for less than $300. Yet, the average PC retails for about twice that -- the sub-$300 market is a small segment.

Still, the tech landscape is far from stagnant. Although Google's share of the desktop market is insignificant today, it would be a mistake to assume that will always be the case. Google's Chromebooks have numerous advantages over traditional PCs powered by Microsoft's Windows: They boot up almost instantaneously, never need to be manually updated, and are basically impervious to traditional computer viruses.

Microsoft clearly understands the threat posed by Google's operating system -- the company has launched an ad campaign attacking Chromebooks on the grounds that they are not "real" PCs. They aren't in the sense that they can't run any local software, but in an era of cloud computing, the ability to run local software is increasingly irrelevant.

Google encourages Chromebook owners to use its own productivity software, but a basic, cloud-based version of Microsoft's Office can be accessed, as can programs of such complexity as AutoCAD. As more software migrates to the cloud, Google's Chromebooks will only become more useful over time.

Microsoft's move into hardware has alienated its partners
Meanwhile, Microsoft, in its attempt to compete with Google and Apple on the tablet front, has alienated many of its longtime allies. Hewlett-Packard's CEO Meg Whitman labeled Microsoft a "competitor" earlier this year, and rightfully so -- Microsoft's own Surface and Surface Pro PCs compete with devices offered by Hewlett-Packard.

To be clear, Hewlett-Packard isn't giving up on Microsoft's operating systems (far from it -- it's actually trying to help Microsoft explain Windows 8 to customers) but it has begun to heavily embrace ChromeOS in 2013.

HP launched three Chromebooks so far this year, and Whitman has emphasized the devices in HP's recent earnings calls. For HP, there are a few advantages to selling Google's operating system over Microsoft's: Unlike Microsoft, Google doesn't charge HP for ChromeOS, nor does it compete on the hardware front (Google's own Chromebook Pixel is an overpriced, halo item).

Will ChromeOS replace Windows?
Microsoft's Windows business won't vanish anytime in the near-future, but the story around Google's ChromeOS is still vastly underappreciated. In an era of cloud computing, the limitations of Google's operating system are slowly falling by the wayside.

With LG, HP, and other hardware partners coming onboard, ChromeOS should be expected to take a sizable chunk of the PC market in the coming years.

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Read/Post Comments (4) | Recommend This Article (3)

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 December 26, 2013, at 2:40 AM, emilykulish wrote:

    The low-priced Win8 tablets, the new Bay Trail CPU based touch laptops will be Microsoft's weapon to defeat Chromebook.

  • Report this Comment On December 26, 2013, at 9:43 AM, EdwardInFlorida wrote:

    I have a Surface RT running Windows RT 8.1, and two 7" Android tablets, one of them being a 2nd generation Google Nexus 7. I like them both very much. Each offers great enjoyment in their use.

    But considering the topic presented here, I do prefer a device that can run local, and cloud applications. I don't believe I'd be comfortable with a device that depends on internet connectivity exclusively.

    I had a co-worker who bought the Acer version of the Chromebook, and neither her nor I were too impressed. She returned it back to the store in less than 10 days. That said, I'm sure there are lots of folks perfectly happy with the Chromebook.

  • Report this Comment On December 26, 2013, at 10:53 AM, techy46 wrote:

    Chrome's internet dependency is it's Achilles heal. Google can't afford to compete in real PC applications.

  • Report this Comment On December 26, 2013, at 1:23 PM, kellenbmiller wrote:

    Most pc's are hooked up to the Internet. The reason for the Cromebook not selling is that it is not that great. Microsoft fired the guy that introduced Metro or window 8. Probably more because it was not a step up. It was a step sideways. Unlike Vista that could be upgraded to 7. W 8 is lacking a complete upgrade from 7. I haven't seen 8.1 or 8.2. to see if they included Windows with it. But to be honest W 8 is a lot like Chrome. So maybe I am being too critical of them. It might not be a simple task. But they need to use W 7 as its startup screen with 8 as enhancements. A desktop startup screen is normal , easy to use and self navigating. With the desktop theme you have more advantages than Metro's layout. The Chrome OS is at least a Desktop Layout. Something MS should follow not spend money telling people it is no good. They are shooting themselves in the foot. Microsoft is all about the Chrome book they should release their own. End of story.

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