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Once Microsoft's Biggest Ally, Intel Is Now Helping to Bring Down Windows

Intel (NASDAQ: INTC  ) and Google (NASDAQ: GOOG  )   (NASDAQ: GOOGL  ) announced a lineup of new Chromebooks, Chromeboxes, and Chromebases last Tuesday, all of which are powered by Intel's processors.

The once-dominant "Wintel" monopoly -- PCs powered by Intel's processors running Microsoft's (NASDAQ: MSFT  ) Windows operating system -- has been fading for years as tablets and smartphones have increasingly cannibalized sales of traditional PCs. But Chromebooks present a unique challenge to Microsoft's Windows. Intel's increasing support of Google's platform is a bad sign for the future of Microsoft's operating system.

Microsoft's war on the Chromebook
Over the last few months, Microsoft has been waging an aggressive war against Chromebooks, slamming them in dedicated ads and reducing Windows licensing fees to makers of low-cost, Chromebook-competitive Windows laptops.

Often, Microsoft's response to Google's Chrome OS has elicited confusion from the general tech press. If Chrome OS is such a tiny share of the overall computing market, why does Microsoft care?

The power of Chrome OS
Put simply, there's a reason that nine of the top 13 best-reviewed laptops on are Chromebooks. Given its limited market share, few have been exposed to it, but over time, I remain convinced that the market will come to appreciate the tremendous value offered by Google's cloud-based operating system.

Owners of Chromebooks never need to install drivers or patches. They don't have to worry about viruses. Software degradation (the gradual sluggishness that often afflicts Windows PCs) is not a problem. Most of all, they're cheap -- Amazon's top-rated laptop retails for just $199.

"Chromebooks get better over time," Google's Caesar Sengupta asserted last week. Sengupta was referring to the steady stream of upgrades Google has made to the operating system (most recently allowing movies purchased through Google Play to be viewed offline). But there's more to it than that.

The primary criticism of Chrome OS has been its inability to play any form of local software except Google's own limited web apps. Years ago, this was a major limitation, and is still an issue, but is increasingly irrelevant.

The rise of cloud computing has made, and continues to improve, Chrome OS' viability. Obviously, all cloud-based sales software is accessible, but so is Microsoft's Office (a stripped down version, admittedly) and AutoCAD. This is a trend that will only continue -- Microsoft itself is helping to facilitate it with Azure.

Betting on the Chromebook trend is a great move for Intel
Intel's processors don't power all the Chromebooks in existence, but they do power most of them (notably, Samsung's Chromebooks use mobile processors). Betting aggressively on the Chromebook trend (Intel revealed that it's now the second-biggest contributor to the Chrome OS project, next to Google) could ensure that if Chromebooks do catch on in a big way, Intel need not worry about losing another processing market to its mobile-focused competitors.

At the same time, Chromebooks provide a level of competition with tablets -- a market Intel is still struggling to crack. It may seem like an odd comparison, but others (including Laptop Mag) have contrasted the two platforms extensively.

Chromebooks are priced competitively with tablets and boot up almost instantaneously -- a few are even sold with built-in wireless network connectivity. For someone looking for a cheap device capable of accessing the Internet, a Chromebook could be a great alternative to a tablet.

While Microsoft's Windows won't vanish in the near future, Google's Chrome OS is a major, seemingly underappreciated threat. Chromebooks aren't for everyone (at least not yet), but are steadily improving, and with Intel on board, should see greater adoption in the future.

Intel is betting big on this next great growth market
In addition to Chromebooks, Intel is working hard on new processors designed for an entirely new set of devices. If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Read/Post Comments (10) | Recommend This Article (4)

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 May 12, 2014, at 10:06 AM, Jeffkory wrote:

    Microsuck did it to themselves by cramming worthless aggravating operating systems down our throats and by dropping support for their products- This win 8 laptop is my last microsuck product- I won't support companies that won't support their products { microsuck & sony }. MICROSUCK= MICRO the size of your wallet after they SUCK it dry every 2 years with a new operating system- and us fools keep supporting them- Priceless.

  • Report this Comment On May 12, 2014, at 10:16 AM, rav55 wrote:

    Intel is lossing $3.1 BILLION per year for the priviledge of selling tablet and mobile silicon for less than the cost of manufacture. This is insane.

    Microsoft must be busting a gut laughing.

    "In 2013, Intel's mobile chip division lost a hefty $3.15 billion, after posting an operating loss of $1.78 billion in 2012. In the first quarter of 2014 alone, the Mobile and Communications Group saw a $929 million operating loss on a meager $156 million in revenue, according to new financial results issued today by the company."

    So yeah Intel might be throwing Microsoft under the bus but Intel is "cutting off it's nose to spite it's face".

    When will Intel stockholders get sick and tired of this bleed?

    To date Intel's Mobile and Communications Group has lost $5 BILLION and it is on track to lose close to $4 BILLION more this year.

    SO who is really getting screwed over? Microsoft? Nope, just Intel stockholders. Intle would have reported earnings of $0.45 per share this quarter withould those losses. Intel stock would be worth more than $35 a share now.

    What insanity has taken over Intel where it eats it's own young and wastes it's stockholders money?

  • Report this Comment On May 12, 2014, at 10:54 AM, GameBot wrote:

    Chrome OS has LESS THAN 1% of MARKET

    I put that in caps to ensure it gets into the heads of the talking heads.

    That's the big news folks, forget the 1000s of stories the bored media are telling you and looking at the numbers,

    It is something us real investors do we call it DD...

    Chrome OS has a tiny fraction of the market so small most don't break it out from "others"...

    In other words all the talk is just that...... Talk.

  • Report this Comment On May 12, 2014, at 10:55 AM, GameBot wrote:

    now to the guy who post some bs about amazon sales.

    I say STOP! do your DD be an investor not a sheeple

  • Report this Comment On May 12, 2014, at 12:31 PM, jpanspac wrote:

    Yawn. Wake me up when Chromebooks have >10% market share.

  • Report this Comment On May 12, 2014, at 1:54 PM, Beachbum815 wrote:

    I'm not a big fan of Chromebook or with the direction with Cloud computing in general. they, suckers you into free services, then once they have you, they changed to fee base service. This happen with Google apps. Pretty soon, rather than just purchasing a once time purchase of software, we are now going to be faced with monthly fees. In the end computers will be like smart phones. They (computers) will be free as long as you purchase a 2-year contract for a particular software at $$$ per month.

  • Report this Comment On May 12, 2014, at 4:56 PM, JoeLemon wrote:

    Microsoft has around 5% of the mobile market share but is a big fail. Chome OS has less then 1%, and windows is done.

    Seriously just let HS kids write your articles they could do a better job.

  • Report this Comment On May 12, 2014, at 4:58 PM, akosibentot wrote:

    Oh....oh...No more Intel Inside. :-)

  • Report this Comment On May 13, 2014, at 1:59 AM, emilykulish wrote:

    This guy has been very successful in posting this kind of cr*p as click bait. But he is just a loser.

    Microsoft is actually much stronger than Intel and Google. Intel is of course much weaker than Microsoft. If Microsoft acquires AMD, Intel will be dead. With smartphone and tablet sales growth quickly slows down, Google will also face huge problems: its revenue and profit growth has missed estimates in the past few quarters; the CPC is dropping very quickly as more people search from mobile devices, but advertisers clearly don't want to pay for such useless clicks. In fact, if PCs disappear today, Google will suffer more than Microsoft.

  • Report this Comment On May 13, 2014, at 10:56 AM, Gordo1 wrote:

    Well folks I guess its up to intell where there put there chips. However, tablets and laptops are popular, however not as durable over a long period of time. Google is known for there searches, but once they try to get into the gadget industry, sorry a little too late, and way too much competition. Laptops, and tablets have a limit amount of time they last. There is a lot of turnover. One mistake intel is making is counting on supply over the turnover. Because these gadgets are can easily be damaged the manufactures take a hit at replacing such gadgets with there warrantees. of course of the price wars of such gadget less money they make. Plus intel is limiting there market share. Everyone ones PC for years. I have three PC. One still from 2004. Tell me how long a laptop lasts, or a tablet, or a phone? Intel is trying to play the stock market, with high risk investments, with a quick greater return, instead of placing there technology in a long term blue stock with smaller stable returns over a long period of time.

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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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