Will $199 Windows Laptops Hurt Apple and Google?

Microsoft (NASDAQ: MSFT  ) isn't ready to cede the floor in netbooks to Google's (NASDAQ: GOOG  ) Chromebook. Microsoft Chief Operations Officer Kevin Turner spoke at the software giant's partner conference Monday, and it seems as if it will be raining cheap Windows-fueled portables this holiday season.

The Verge is reporting on some of the new laptops that will be hitting the market in the coming months. 

The head turner is Hewlett-Packard (NYSE: HPQ  ) putting out a $199 laptop running Windows, but there were no specs offered beyond the ridiculous price point mentioned. There was also talk about HP "Stream" computing devices as cheap as $99, but with small screens that suggest that these will be more along the lines of cheap tablets than petite-sized laptops. There is already a growing number of cheap Windows laptops on the market, but now we're talking about entry-level Chromebook or subsidized iPhone cheap.   

Turner didn't have a problem talking up the specs of a $249 Toshiba laptop that will feature an 11.6-inch screen and 32 gigs of solid-state storage capacity, weighing in at a mere 2.4 pounds when it rolls out later this year.

Apple (NASDAQ: AAPL  ) and Google probably aren't nervous. Apple toils away at the high end of the market, and Google's likely hoping that the next wave of Windows devices will be bogged down by Microsoft's operating system and therefore keep Chromebooks as the platform of choice for folks wanting minimal boot times, optimal user free space, and malware-free living.

However, now that Microsoft is slashing Windows 8.1 and Windows 8.1 RT licenses to grow manufacturer support and market share, can we continue to dismiss the tech titan? PC sales have been slumping for a couple of years, but they are starting to show signs of life in this country.

Industry tracker IDC put out its preliminary read for the second quarter last week, showing that PC shipments in this country actually grew from 15.6 million units to 16.7 million units. Dirt-cheap computing has been at the heart of the spike, led by the emergence of hassle-free Chromebooks. IDC is only measuring the number of units shipped, but it wouldn't be a surprise if the overall value of the desktops and laptops declined. 

Apple may be a market darling, but according to IDC it's the only one of the five biggest players in this country posting a year-over-year decline in the quarter that just ended. That's not a coincidence. There will always be a market for high-end machines, especially given Apple's unique Mac features. However, this dynamic suggests that pricing is an issue with mainstream buyers that are relying more and more on tablets and smartphones to satisfy a lot of their computing needs.

It's against this backdrop that Microsoft is getting hungry for the low end. Apple and Google may not be worried, but it will be a problem if Microsoft isn't fading in relevance as they would like to believe.

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  • Report this Comment On July 15, 2014, at 4:47 PM, WineHouse wrote:

    What's so odd about $199 Windows portable computers? Five years ago, I bought a netbook for travel purposes, for $300. It was an Asus Eee PC with Windows XP, Intel ATOM chip, 1G memory, 160G hard drive, three 802.11B/G/N USB ports, an SD slot, camera + microphone, ethernet LAN port, dial-up phone line port (would you believe!?!), built-in W-Fi, etc. and a 10" screen. The same specs (or better) should cost quite a bit less nowadays. So long as you don't expect much from the device, you shouldn't have to pay very much for it. It did everything it was supposed to do, but it was slower than cold molasses & drove me nuts every time I used it. Fortunately I had a "real" (SonyVaio) computer to use at home. Fast-forward to January 2012, I replaced the Asus with a 32-Gig iPodTouch5 (also $300; fits in the palm of my hand) for traveling, and haven't looked back.

    And BTW, that little iPodTouch really "sold" me on Apple products. But that's another story.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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