The Box That Could Hurt Microsoft and Squash Apple’s Hobby

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Who would have thought that a $179 box could threaten both the PC industry and the streaming player industry at the same time? Google (NASDAQ: GOOGL  ) is pushing a small box made by ASUS dubbed the Chromebox. This computer which runs the Chrome operating system could be a major problem for Microsoft's (NASDAQ: MSFT  ) PC business, and might derail Apple (NASDAQ: AAPL  ) TV's plans before they even get started.

The PC industry is having enough trouble already
Pretty much everyone knows that the PC industry has problems and they aren't getting better. According to IDC Research, last year the PC industry witnessed a sales decline of 10% and 2014 may see a decline of 6%.

In the most recent quarter, Microsoft reported its OEM business saw a revenue decline of 3%. While the company's Surface revenue more than doubled, this division reported less than $900 million in sales compared to the over $5 billion generated by Consumer Licensing. Since licensing gives Microsoft a gross margin of more than 90% compared to a less than 9% margin in devices, any threat to Microsoft's OEM business is significant.

The second challenge the Chromebox could pose is, Google already has a significant lead in search and Bing doesn't need further challenges. Bing reported a 34% increase in advertising revenue in the most recent quarter, but obviously if the Chromebox is a hit Google's search business will directly benefit. No matter how you look at it, the Chromebox is a big challenge that Microsoft had better take seriously.

This company can't sit still either
It might seem that computer makers like Hewlett-Packard (NYSE: HPQ  ) could potentially benefit from the appearance of the Chromebox. It's nearly certain that ASUS will benefit as one of the first adopters, but HP doesn't have a great track record when it comes to anticipating trends.

The Chromebook has been around for a few years, but the difference between a Chromebook and the Chromebox is, one is designed to be a replacement for a tablet or traditional laptop. However, the Chromebox could be a second or third computer or even replace a streaming media player.

HP's Chromebook lineup is about on par with some of its peers, although slightly more expensive due to the HP brand. Where HP missed the boat completely is in the tablet market. With the iPad and strength of the Samsung lineup of Galaxy and Note tablets, HP has known the tablet market was a huge growth opportunity for a while.

Unfortunately HP's current tablet offerings show that the company hasn't learned its lesson. The company's recently HP 8 tablet was met with reviews calling the device a, "mundane tablet with a ho-hum screen ." That's actually quite an understatement as the HP 8 has a ppi of just 160 compared to Google's Nexus 7 at 323 ppi and Amazon's Kindle Fire HD 7" with a ppi of 216 .

The point is, HP gets 30 % of its revenue from Personal Systems and could use a boost like a Chromebox, but the company plans on introducing its version of the device "later this spring " and pricing hasn't been announced. This delay and questionable pricing could cut off HP's potential gains from this device before it even gets started.

Hurry up Apple!
There have been rumors for months suggesting that Apple TV would move from a "hobby" to a serious business. Whether Apple releases an actual TV set with iOS built in, or a set-top box that will integrate with live TV is yet unknown, but whatever the company expects to do it needs to hurry up.

With over 50 million iPhones and over 25 million iPads sold in the last quarter alone, clearly Apple has the interest of customers. The fact that these two devices make up more than 75% of Apple's revenue, suggests the company could use a big hit like an Apple TV to diversify the company's revenue.

The problem is, with a $179 price the Chromebox could easily substitute for a streaming player like the Apple TV. Though the Chromebox is about $80 more expensive than top of the line streaming boxes, this could be a close enough price difference to sway customers away from a limited experience to a full computer.

With the Chromebox's ability to run a full browser, plus Google's apps and with more apps coming online, this device could give customers the ability to stream everything from the web instead of relying on the apps available on other boxes.

The bottom line is, the Chromebox is a $179 weapon of destruction that Microsoft, HP, and Apple all need to be ready to respond to. If this product succeeds, Google may be able to box out its competition from the PC and the streaming media player industry at the same time.

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Read/Post Comments (25) | Recommend This Article (7)

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 March 15, 2014, at 2:43 PM, anonxx wrote:

    I can see this effecting Apple, but I dont recall Windows really caring about the streaming player devices.

    Chromebook/box and PC, not exactly on the same playing field. Remember Nettops? Id say thats more accurate to describe a chromebook. I own a chromebook, a PC and a streaming player. The chromebook cannot replace a PC in terms of performance, running major applications like Photoshop or moviecreation and even running a DVD or blu ray, more memory, etc.

    Chromebook is just only good for webbrowsing and light netflix youtube viewing. Its my device i use to take for notes in class, but its a pain in the ass some times if i dont load my documents before going into offline mode because it is cloud based.

  • Report this Comment On March 15, 2014, at 3:05 PM, TinyTango wrote:

    While Chromebox and other Devices are add-on devices, there is nothing out there that can potentially replace over 300 million PC installed base in the world.

    Some indications are that this may change. We can see an upcoming wave of PCs coming which can be called "Cross over PCs" that share the traits of power of PCs and the size of smartphones.

    Recently, this crowdfunding campaign at Indiegogo (, showed off some fundamental innovation employing rocket science in a PC gadget, and ended up collecting over $300k.

    Feel free to comment what you think of it.

  • Report this Comment On March 15, 2014, at 4:08 PM, bendriver wrote:

    " PC industry witnessed a sales decline of 10%"

    So is that just whole PCs that are being sold and bought? Or does that include individual computer parts as well?

    Quite honestly I think more people now-a-days are building their own PCs because its a lot cheaper and easier. And assuming you have a decent processor and atleast 4 gigs of RAM all you need to do is just upgrade the video card to get better performance in playing games, saying most of the work from gaming that is required is all done on the video card now. You no longer need to buy a whole new computer just to play newer games anymore and I think thats why sales have been declining.

  • Report this Comment On March 15, 2014, at 4:20 PM, URALLFOOLS wrote:

    After experiencing Chromecasts weak offering compared to their competitor (Roku), the Chromebox will fall prey to more expensive machines but that are actually functional in their own right. Cheaper most certainly does not equate to better. I dont forsee this affecting PC sales anymore than I see the Chromecast affecting Roku's. Especially with Roku coming out with a "stick" type Roku streamer. $179 for a chrome based system still wouldnt be worth it. Will I need my PC to stream movies and games and music to the chromebox like I need my Ipad or phone to stream to the chromecast? The chromecast on its own is useless and I am sure the chromebox will be affected by the same limitations of the chrome OS.

  • Report this Comment On March 15, 2014, at 6:37 PM, Toransu30 wrote:

    Of course the apple tv can already do everything people talk about on it's only a "hobby" as far as writers are concerned. I'm sure if they wrote about the real abilities of the little black pucks Apple would never let them write about their products again but it's a bit like reading about pot during the reefer madness times.

  • Report this Comment On March 15, 2014, at 7:08 PM, badkat7 wrote:

    The Chromebox uses a low-end Intel processor so I doubt Intel will be crying too hard. As for Chrome, it is an underdeveloped, under-imagined product that to-date is dwarfed in every division by Windows, Don't thinks so? Compare Office 365 to Google Docs/Sheets etc and tell me that Google has the measure of Microsoft! Maybe in five years, but certainly not today. There is nothing about the Chromebox that would cause me to give up my tablet, my laptop or my PC. And there's not much point in connecting it to my samsung tv - it already has a quad core processor inside it!

    Now I know what you're thinking; maybe I'm a Windows or Apple fan. But I have Chrome on my PC, phone and tablet, and I have a Chromecast on the back of two of my flat screen TVs. Truth is, Google's imagination has clearly stalled.

  • Report this Comment On March 15, 2014, at 7:28 PM, badgerzilla wrote:

    There was a day when only computer programmers used a PC then came the internet and consumers started buying PCs. Now those consumers can buy Chromebooks so the day will come again when only computer programmers will own PCs

  • Report this Comment On March 15, 2014, at 7:37 PM, kevins71 wrote:

    Not a chance in hell.

    Anything Google Chrome related is a waste of time, money, energy and whatever you want to add to that list.

    Not sure hot AppleTV got thrown in the mix, because the Asus device is really a really dumbed down desktop wannabe computer, while the AppleTV has a specific purpose.

    Unless any device can stream the 500+ movies I have in iTunes, stream from my iPhone, iPad and iPod without having to have a "specific" model like you do in the Android world, it is a useless device meant for people who 1) don't have a lot of money and 2) don't do anything really anything important on said device unless it is Google related, which is lame in its self.

  • Report this Comment On March 15, 2014, at 7:40 PM, TinyTango wrote:

    While Chromebox and other Devices are add-on devices, there is nothing out there that can potentially replace over 300 million PC installed base in the world.

    Some indications are that this may change. We can see an upcoming wave of PCs coming which can be called "Cross over PCs" that share the traits of power of PCs and the size of smartphones.

    Recently, this crowdfunding campaign at Indiegogo (, showed off some fundamental innovation employing rocket science in a PC gadget, and ended up collecting over $300k.

    Feel free to comment what you think of it.

  • Report this Comment On March 15, 2014, at 7:52 PM, drjekelmrhyde1 wrote:

    I would love some of what the author is smoking

  • Report this Comment On March 15, 2014, at 8:05 PM, RMacky wrote:

    Google has tired of Android, so what you see today is about what you'll see next year too. It will be a short while before they get distracted by the "next big thing" if they haven't already... Have you heard of robots? w00t, and the Google-parade is off again chasing the next rainbow or unicorn or whatever...

    I've watched a whole panoply of ideas that Google has announced, only to see few make it to gestation, and even some of those were killed in the cradle.

    While Microsoft does something very similar (they invented vaporware in the '80s), they haven't announced every hair-brained idea Ballmer had, nor every great idea Ballmer killed.

    Apple, on the other hand, doesn't give a clue what's going on behind the scenes, until they are ready to ship, and ship in a big way. Oh, there are lots of rumors, but not apple announcements. Because of that, The Motley Fool and other pundits can only guess what Apple may announce next, and ship in the millions soon after.

    So, I can only be amused by stories such as this one. Who do you want to believe. The Google clown car of noise without substance, Microsoft's new CEO, who was effectively bound hand and foot by the outgoing Uncle Fester, or Tim, the stone-faced Sphinx.

  • Report this Comment On March 15, 2014, at 10:28 PM, tsabar wrote:

    The Motley Stool!

  • Report this Comment On March 15, 2014, at 11:20 PM, petenmaryp wrote:

    Am i the only one in the world that knows Samsung already makes a product called the Chrome Box.

    I own a Chrome Box, made by samsung that runs the Chrome OS.

    You would think at least the author of this article would do the research and find this out.

    If Asus makes some kind of a streaming device it certainly won't be called the Chromebox, and it probably wont even sell nearly as well as the Roku box

  • Report this Comment On March 15, 2014, at 11:45 PM, JJ82 wrote:

    I really love how anything with a processor or app is somehow in the same market as a PC.

    It isn't.

    A tablet will never replace my computer. A smart phone will never replace my computer. A small box that connects to my TV will never replace my computer.

    My computer can do everything. Those things cant. And yes, I have a smart phone and a tablet. No, I did not buy a computer this year or last year...they are made to last more than a few years. You IDIOTS have forgotten that little bit of information haven't you. Also, MS saw those declines because they made and released a portable OS for the PC and few want it nor will ever get it.

  • Report this Comment On March 16, 2014, at 12:03 AM, Valentine26 wrote:

    More total BS from this site. Does this site ever write anything legit or is that why they call it the fool.

  • Report this Comment On March 16, 2014, at 12:42 AM, Theinsultedelf wrote:

    A lot of us no longer have the good paying jobs we had. Congress having taxes and regulated our jobs out to the 3rd world. What is it with these people that don't understand how bad the economy is. I used to buy a PC every two to 3 years. With only lousy service jobs left I ain't got the money anymore for toys.

    My gaming rig died last summer in a lightening storm at 5+ years old and no chance that I will be able to replace it in the next year or two. Even if I could I wouldn't touch a Win8 PC.

  • Report this Comment On March 16, 2014, at 1:58 AM, JoeGuy wrote:

    Win8 isn't so bad, but there are a lot of add ons to it, it's an attempt to merge Windows with Bing Pretty much succeeds on that level. The sky is no longer the limit for MSFT though. They need to score more hits and less misses. I think they'll push harder for more powerful Win8 phones and wait on the TV for awhile. Google is pushing it's lame browser to far. doesn't excite consumers.

  • Report this Comment On March 16, 2014, at 5:11 AM, DrTek wrote:

    Not gonna happen. We've seen how the Chromecast has done. Replacing cast with box won't help at all. AppleTV will always be at the top.

  • Report this Comment On March 16, 2014, at 9:08 AM, GaryDMN wrote:

    As if cheap Linux computers haven't existed for a decade or two. Just another low profit margin box from China, that's more toy, than computer.

  • Report this Comment On March 16, 2014, at 9:51 AM, Burstedbladder wrote:

    I think the Chromebox is ok, my problem with Chrome/Google is that they track your every move, sell your info to other companies and then they spam your web pages with all sorts of things you have looked up on the net. This is the reason why I wouldn't never buy one of these boxes, and this is why I have ditched Microsuck and have gone solely to Apple. At least I have better security and privacy on an apple computer than i do on any other pc that's running Microsuck and chrome/google software.


  • Report this Comment On March 16, 2014, at 11:39 AM, AbeFromTokyo wrote:

    URALLFOOLS - the limitations of the chromecast of which you speak really have nothing to do with chrome OS and the chromebox.

    These kind of devices will probably take a thin slice of pie away from the PC market. However, I think it is the Xbox that devices at this price also affects. The Xbox is trying hard to be the entertainment hub connected to your television. Obviously the chromebox does not affect the serious gamers' decision - however, it certainly does take those who justify the price on the game console for the features besides gaming which it offers.

  • Report this Comment On March 16, 2014, at 12:17 PM, mobycat wrote:

    When it comes to computers/electronics, I have learned that any article on the Motley Fool is pretty much a waste of time.

    Seems like they are more like ads than real reporting.

  • Report this Comment On March 17, 2014, at 2:30 AM, ipazzport wrote:

    Unisen iPazzPort Cast is a mini engine to turn your Home HD Screen become a All Media Sharing Center with full screen by Smart phone or tablet.

  • Report this Comment On March 18, 2014, at 6:10 AM, AG4IT wrote:

    The Chromebox is ideal for scenarios like call centers. Like the Chromebook, Chromeboxes start up fast and are easy to manage and use.

    There are also solutions that make Chromeboxes more relevant to the enterprise by allowing users to access Windows and corporate applications. Ericom's AccessNow HTML5 RDP solution enables Chromebox users to connect to any RDP host, including virtual desktops and Terminal Server, and run their Windows applications and desktops in the Chrome browser tab.

    There's nothing to install on the Chromebox, as AccessNow runs within the Chrome browser, which reduces hassles for IT. The user simply connects to the URL given him by the IT admin, logs in and then connects to their applications or virtual desktop.

    For an online demo, open your Chrome browser and visit:

    Please note that I work for Ericom.

  • Report this Comment On May 20, 2014, at 7:01 PM, bills8091 wrote:

    Google has really become a power house in the technological arena. I don't think they are going to stop either. They are doing incredible things.

    Bill |

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Chad Henage

Chad is a self professed tech nerd and has been investing for over 20 years. He follows nearly everything in the technology and consumer goods sectors, and is a huge fan of the Peter Lynch investing style. He has over 1,000 published articles about stocks and investing. You can follow Chad on Twitter at @chadscards1274.

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