Another Reason for Microsoft to Worry

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Diehard Microsoft (Nasdaq: MSFT  ) fans aren't worried about Google's (Nasdaq: GOOG  ) new Chromebook.

How dare someone consider a cheap Web-based laptop with minimal internal storage and limited functionality a threat to Mr. Softy's empire? Where's the love for PC gaming and fancy internal productivity software? What's a consumer or a small business to do when connectivity is down? 

The problem is that folks are already starting to turn their back on Microsoft's chunky operating system. Global Windows revenue fell 4% in Microsoft's latest quarter. People are realizing that a smartphone or tablet running Google's Android or Apple's (Nasdaq: AAPL  ) iOS is more than enough to fulfill basic computing functionality. Why not go with a dirt-cheap Google laptop that boots up in a flash, doesn't require anti-virus software, has a ridiculously long battery life, and can feast on the growing cloud computing revolution?

Chrome wasn't built in a day, but Google now has 160 million active users of Google's Web browser.

Google also has head-turning partners willing to give Chromebook a shot. Acer and Samsung will make the first laptops, at price points between $350 and $500. They'll be available through (Nasdaq: AMZN  ) and Best Buy (NYSE: BBY  ) come June 15. Verizon (NYSE: VZ  ) is stepping in to offer 100 megs of free connectivity every month for the first two years on Samsung's 3G model for when Wi-Fi isn't available.

Chromebook obviously isn't going to be for everybody. However, it will be substantially cheaper for companies that have already turned to cloud-based enterprise software. Students who lean on computers merely to surf the web, listen to music, and run Microsoft Office programs will be just fine migrating to Google's free alternatives.

This isn't the end of Microsoft. This isn't even another nail in its coffin. Microsoft isn't dying. However, this is another bold attempt at making the world's leading software company less relevant. These shots are already taking their toll on Microsoft and its languishing share price over the past decade.

Chromebook isn't a Microsoft killer, but it's going to be another headache for Mr. Softy.

Is Chromebook going to be a flop or does it have a shot at the market it's aiming for? Share your tips in the comment box below.

Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Best Buy, Google, and Microsoft. Alpha Newsletter Account, LLC owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz still does most of his computing via Microsoft's wares. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (12) | Recommend This Article (6)

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, 2011, at 8:42 PM, thethreestooges wrote:

    a cheap filmsy barebone webtop for $350-$500??? plus all the app you need to pay with pop up Google advertising?? Oh wait, I still need to pay yearly to use the cloud!

  • Report this Comment On May 12, 2011, at 8:55 PM, fatmonk wrote:

    MSFT should be worry about this:

    It is all about Mobile Platform and Cloud.

    APPL is slowly merging iOS and MacOS.

  • Report this Comment On May 12, 2011, at 10:10 PM, Henry3Dogg wrote:

    More beta software. Google are going to find it increasingly difficult to get people to buy the first few versions, unless they start to release real products.

  • Report this Comment On May 12, 2011, at 10:22 PM, CluckChicken wrote:

    "Why not go with a dirt-cheap Google laptop that boots up in a flash, doesn't require anti-virus software,"

    Dirt cheap is 350-500? So then a Dell 15.6" laptop would also be dirt cheap and I am pretty sure I could find cheaper if I looked. As a bonus you would actually get to use all the software you already have and not have to buy it all a 2nd time. Plus you can still use the cloud.

    Doesn't require anti-virus software? Really? It doesn't sound that way:

  • Report this Comment On May 12, 2011, at 11:04 PM, ConstableOdo wrote:

    No Windows license required. Hahahaha. The sun is already starting to set on the once mighty Microsoft Empire. One more Vista-type screw-up with Windows 8 and it'll be see-ya-later Mr. Softy.

  • Report this Comment On May 12, 2011, at 11:12 PM, melegross wrote:

    So we have WebOs going on HP's computers, and now this. Interesting, but will it fly?

  • Report this Comment On May 12, 2011, at 11:45 PM, SeekTheFire wrote:

    Chromebook has a real shot. It is a true disruptor. Don't let its initial "cheap and barebones" nature fool you. That is a typical disruptor pattern... looks like it can't hang with the champ, so nobody pays attention until it gets better and better for a cheaper price and then suddenly (maybe soon) its good enough for most people and cheaper and goes on to rock the champ.

    -SeekTheFire (long GOOG)

  • Report this Comment On May 13, 2011, at 5:06 AM, kariku wrote:

    @ConstableOdo: I really don't understand why people still hate MS. Google *is* the evil now, for many years.

    At least MS gives you useful software and one of the best OS in the world.

    What does Google give you ? A Linux wrapped in shiny foil (read: lipstick on a pig), and a lot of unfinished products, forever in beta.

  • Report this Comment On May 13, 2011, at 8:11 AM, loki1729 wrote:

    lol ... this article looks like a Paid one ... with paid comments too ,,,,

    neways ... eat lots of dryfruits( like dates) that gives strength to ur heart ... u guys require that

  • Report this Comment On May 13, 2011, at 12:29 PM, Borbality wrote:

    The chromebook has potential. I have one of the free beta models. The battery life is NOT "ridiculously" long, and it's not as fast as it will need to be. If I run Pandora and browse at the same time, scrolling through web pages will make the music break up. Angry birds is even a little slow. I'm guessing the new version will be faster though.

    It will also need some kind of browser and (hopefully) free google-related cloud storage, before we really get rid of the PC. I think that's where they're going, with the google music storage and all that stuff, but as it is the Chromebook doesn't really even have a file browser, since you can't really download anything on it. Of course, I'm sure that's what all the apps are for.

    I like that they're including the 100MB 3G thing. This is the only thing that would make me consider buying it, although 100MB isn't that much, it works for me since I'm online at work most of the day.

    Last year I got the wife a Windows 7 HP netbook for about $350. I prefer the Chromebook becuse it's fast and simple, but at least I know i can actually store things on hers. The cloud needs to catch up before any PC is really replaced.

  • Report this Comment On May 13, 2011, at 12:29 PM, Borbality wrote:

    and oh yeah, 350-500 is a little crazy, unless it's completely and seamlessly replaces the PC sufficiently (it won't yet, can't yet), AND doesn't require a data plan.

  • Report this Comment On May 14, 2011, at 8:08 AM, icuryy4me wrote:

    Your data has less legal protection when stored in the cloud. A warrant is needed to get your hard drive.

    Think about it from a hackers point of view. Why attack a single PC when you can attack a single site with millions of accounts? It keeps happening.

    Reliabilty - consider the recent Amazon meltdown. Availability - your Chromebook isn't going to work in the many locations that don't have 3/4G.

    Cost of ownership for four years about $2000.

    Limited functionality. You can only run apps that the cloud provide.

    I'm not getting it...but then I didn't get Facebook either:) Despite this, I'm sure it will be a sucess.

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