You might not have guessed it, but Google's (NASDAQ:GOOGL) Chromebooks are a hit after all.
There hasn't historically been a lot of readily available data on Chromebook shipments, as Google doesn't disclose them nor do OEMs. Only recently did Chrome OS show up in Internet usage statistics from Net Market Share -- with a measly 0.02%. Chromebooks are the new netbooks, and netbooks are already on their deathbed thanks to low-cost tablets, nearly all of which run Android.
Well, a recent Bloomberg report citing data from NPD says that Chromebooks are gobbling up the low-end laptop market. Over the past eight months or so, Chromebooks have grown and now comprise 20% to 25% of the market for laptops priced at $300 or less. The market researcher goes as far as to call this segment the fastest-growing subset of the broader PC market.
Laptops under $300 are expected to grow at least 10% this year, well above the 14% and 11% declines the worldwide PC market has experienced in the first two quarters of 2013. Gartner pegs Chromebook's share of the U.S. market at 4% to 5% in the first quarter.
NPD believes that after some initial searching, Chromebooks have found a niche spot in the market after the first batch of the devices were priced too high (closer to $500). Excluding the super high-end Chromebook Pixel that costs $1,300, the current Chromebook lineup is priced between $199 and $330. Samsung kicked things off in October, Acer followed suit a month later, and PC giant Hewlett-Packard joined the fray with its first Chromebook in February.
Much like how Linux posed a threat on the low-end to Microsoft (NASDAQ:MSFT) Windows during the first era of netbooks, Chrome OS does likewise. The software giant faces the same dilemmas since the low price points don't give OEMs as much room to pay Microsoft a Windows license fee. Hardware margins on the low end are already slim enough as it is.
Microsoft is aggressively targeting this market segment this year with smaller devices like the Acer Iconia W3, an 8-inch Windows 8 tablet. The software giant has no choice but to offer concessions and discounts to OEMs though, which could pressure margins and put the brand at risk.
The netbook is dead. Long live the Chromebook?
Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool recommends Gartner and Google. The Motley Fool owns shares of Google and 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. The Motley Fool has a disclosure policy.