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 Amazon.com, 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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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google and owns shares of Amazon.com, Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.