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Microsoft's Steve Ballmer Strikes Again

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It's a shame that Microsoft (NASDAQ: MSFT  ) CEO Steve Ballmer will step down from his post -- away from the limelight, investors will lose out on his uncanny ability to correctly foresee upcoming tech trends.

It's simple: If Ballmer has mocked it publicly, it's almost guaranteed to become the next big thing. When Apple (NASDAQ: AAPL  ) introduced the iPhone, Ballmer couldn't stop laughing. The keyboard-less, $500 smartphone he was convinced would never catch on with business users went on to revolutionize the world of mobile computing.

Now it looks like history is about to repeat itself: Google's (NASDAQ: GOOGL  ) Chrome operating system is starting to catch on, much to the detriment of Microsoft and, to some extent, Apple.

Ballmer on ChromeOS
Shortly after Google announced ChromeOS, Ballmer was asked about Google's cloud-dependent operating system -- what did he think of it, and was Microsoft planning something similar?

"I will be respectful," Ballmer responded, cracking an enormous grin and holding back a laugh. "Who knows what this thing is? ... They already announced an operating system [referring to Android]. ... You don't need two client operating systems."

Fast-forward to today: Chromebooks, laptops running Google's ChromeOS, have finally caught on, and Microsoft has responded with an aggressive, anti-Chromebook advertising campaign.

Chromebooks are starting to sell quite well
When the first anti-Chromebook ad made its debut, a number of tech observers were left scratching their heads: Why was Microsoft giving Google free advertising? Chromebooks, while full of potential, just hadn't sold in large enough quantities to be considered a legitimate threat.

But recent sales data challenges that notion: Chromebook sales have really started to pick up. In December, research firm NPD reported that, for the first 11 months of 2013, Google's Chromebooks composed about 21% of the business-to-business notebook market, up from basically nothing in the prior year.

On, two of the three best-selling laptops during the holiday shopping season were powered by Google's ChromeOS. Admittedly, Amazon is just one retailer, but it's an extremely important one.

Why Microsoft and Apple investors should be concerned
As the demand for Chromebooks grows, investors in both Microsoft and Apple have reason to be concerned. Obviously, Chromebooks are an alternative to PCs running Microsoft's Windows or Apple's Macs, but going forward, they could start to steal sales from the tablet market.

As Microsoft's ad points out, Google's Chromebooks are limited in what they can do. They aren't total paperweights without the Internet, but they certainly aren't machines built for power users. They excel at basic computing tasks -- browsing the Internet, checking email, and using Google Apps -- while they start up almost instantaneously, remain largely impervious to viruses, and update themselves. They're also cheap and fairly lightweight.

In short, Chromebooks offer the sort of computing experience that many tablet buyers may have been after. They don't run apps, but typing and doing productive work is far easier on a Chromebook than it is on a tablet.

Apple has seen sluggish iPad demand in recent quarters -- in October, Apple said it sold just 14.1 million iPads, largely unchanged from the prior year. This might be a sign that the market is nearing saturation, or that competition is rising from tablets running Google's Android, but tablet manufacturers, of which Apple remains the largest, could lose potential sales to Chromebooks.

The next great tech trend
As with the iPhone before it, ChromeOS is starting to emerge as the next great tech trend. Hardware manufacturers from Acer to Samsung to Dell and LG have embraced Google's operating system, and Chromebooks are finally starting to catch on.

With their vast limitations, Chromebooks certainly aren't for everyone, but their price and ease of use make them attractive alternatives to both PCs and tablets -- and a threat to Microsoft and Apple.

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Read/Post Comments (9) | 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 January 05, 2014, at 9:52 PM, lkmd98 wrote:

    All is well except the iPad sluggish demand. Funny how you use old numbers to complete your argument with new numbers for Chromebooks. Who cares...

    Time for Apple to move to its next product. Hows the iPod competition going. You should write an article on that!!!!!!!!!!!

  • Report this Comment On January 05, 2014, at 10:01 PM, CharlesThe3rd wrote:

    What are you talking about? Business users are not adopting iPhones... Consumers are. And they are just about at thier expiration. Chrome OS? Don't make me laugh. Windows 8 that you morons laughed at is doing much better than chrome OS. Xbox One, you all shunned, now is revolutionizing the living room. Surface, not pro, that everyone blew off as another Zune, dominated the holidays. iPad just got served. What drugs are you on over there? Surface performed better than chrome OS. What is your deal?

  • Report this Comment On January 05, 2014, at 10:05 PM, CharlesThe3rd wrote:

    PS - there is no way consumers would have bought iPhone at $500. AT&T reduced the price. Ballmer was right. But subsidies made the device cheaper for consumers. That price point allowed it to succeed.

  • Report this Comment On January 05, 2014, at 11:49 PM, JokerJoey wrote:

    Sorry're wrong on all points. However, it is unlikely that Apple will allow Chromebooks to usurp its market share. With the new iteration of the iPad due this year and the larger screen version soon to debut, you will see many more capabilities built into the device. If anything, iPads will start to cannibalize Chromebooks if they aren't already doing it. The Chromebook is a very limited device and newbies who buy them learn this very quickly and desire for something more. As to Steve Ballmer, yes it is a shame that his oracle-like powers will be at least temporarily shelved. We look at Steve as the Joe Biden of the tech world.

  • Report this Comment On January 06, 2014, at 5:07 AM, emilykulish wrote:

    Many tech editors are either ignorant, cheap or just plainly lying. Chromebook shipments was only a couple million units in 2013, which is tiny compared with total PC shipments of over 350 million units in 2013.

    Chromebook has no future as the new cheaper Windows based tablets and netbooks are much more functional but costs about the same.

    More interestingly, Microsoft's Surface tablets have already outsold Google's Nexus tablets in the latest holiday season; Windows Phone shipped over 10 million units in the 3rd quarter of 2013. Even Microsoft's Surface RT, had more units sold than Chromebook. and Xbox One sold 2 million units in just about 3 weeks, more than the total number of Chromebooks shipped in 2013.

  • Report this Comment On January 06, 2014, at 8:30 PM, IloveLinux wrote:

    Some of you are forgetting the power of Google: The most used mobile platform is Android. Some sites report that Chrome is the most used browser. Beating Internet Explorer, Safari and Firefox. The actual numbers are interesting. Chromebooks sales are increasing. They aren't for everyone as tablets aren't either. However find a solid state drive Windows or Apple machine under $300.00. They are fast. Don't get Windows malware. Decent build quality and are more computer then many consumers want.

  • Report this Comment On January 07, 2014, at 11:41 AM, auggybendoggy wrote:

    I tend to agree with Ilovelinux. With lots of upgrades to the android/chrome os it will be able to do much of what people want.

    I tend to see Apple as the one in trouble, not MS. MS is so deep in the business sector they're not going anywhere in our lifetime. But Apple's house is built on items that can soon fade. Phones can be replaced by some other trendy tech. Tablets only need competition from other arenas. I feel Apple is the one who needs to get on the ball and solidify their bank rolls by doing everything they can do crush android. Apple and MS have coexisted for years, so I agree with Ilove, Google is posing a serious threat, but mostly to Apple (IMHO).

  • Report this Comment On January 08, 2014, at 10:46 AM, GirlsUnder30 wrote:


    Yes, Google is a thorn in the side for both Microsoft and Apple but don't count them out just yet. Read below to see what Apple is doing to improve margins:

    and read the following to see who Microsoft might partner with:

  • Report this Comment On January 10, 2014, at 9:22 AM, auggybendoggy wrote:

    Agreed GU30, I'm not saying Apple is in trouble. I only mean their base of solidarity is weaker. However, Apple has shown amazing resiliance and if they keep to Job's model, they'll continue for lifetimes to come. I appreciate what Apple has done, except for one thing- the super high prices. That is my only caveat.. But my wisdom tells me that when all these companies are doing well, we are too; lower prices via competitive innovation and sales.

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Sam Mattera

Sam has a love of all things finance. He writes about tech stocks and consumer goods.

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