Microsoft (NASDAQ:MSFT) has been taking some aggressive steps in recent months to win back the lower end of the PC market from Google (NASDAQ:GOOG) (NASDAQ:GOOGL), which created a new category with its Chromebook laptops.
These low-cost machines strip away many of the things certain users don't need and deliver a decent web browsing experience along with productivity tools for word processing, making presentations, and preparing spreadsheets. Chromebooks, which are made by a number of manufacturers, are more "good enough" than "good," but that value proposition has found a market with consumers that don't need anything too flashy.
Though computers running the fairly limited Chrome OS may not be enough for high-end customers looking to edit video, process photos, or engage in graphics-heavy game play, they have been steadily gaining audience. After their launch in 2011, the Google machines posted a 1% share of the laptop market in 2012, 5% in 2013, and 6% in the first half of 2014, according to data from NPD as reported by The Verge. Microsoft's Windows had 83% of that market in 2011 and has dropped each year since, sitting at 73% for the first half of this year, according to the same data.
Part of the reason for Chromebook's rise and Windows machines' decline is that Microsoft did not offer devices that compete on price. Though there are some more expensive Chrome laptops, many are priced under $200, a price point that, until recently, could only be found on used, older Windows laptops.
Now, however, Microsoft has lowered the price of its OS for certain devices, which led to a couple of sub-$200 Windows 8 laptops being featured in its store for the holiday season. The most promising of the two machines being sold by the Windows maker in that price range, and the one most likely to win back audience from Google, is Hewlett-Packard's (NYSE: HPQ) Stream, which comes in an 11-inch model for $199 and a 13-inch version that sells for $229, but has been discounted at various points during the holiday season to $199.
What is the Stream?
HP's Stream is essentially what used to be called a netbook. It's a laptop with limited on-board memory (2 GB of RAM and 32 GB of hard drive space, only about 17.5 GB is free when you subtract the operating system and other installed software), and a lower-end 2.16GHz (2.58Ghz Turbo) dual-core Intel Celeron N2840 processor. It's a machine meant to be connected to the cloud, and it even comes with 1 TB of cloud storage free for a year.
The specs overall are basic, and the only difference between the 11-inch model and the 13-inch is price and the size of the screen. But the machines, which are similar in function and cost to Chromebooks, have one major difference: They run a full version of Windows 8.1. That means while you would not want to edit video or play most games on the Stream, you could certainly use Microsoft Office, which is dramatically superior to Google's productivity apps.
Stream even comes with a free year of Office 365 Personal (a $69.99 value), which gives Stream users access to Word, Excel, Outlook, Powerpoint, and more.
How does it perform?
I bought a 13-inch Stream for my wife and son for Christmas after testing a number of Chromebook models as well as the 11-inch Stream. My intent had been to buy the smaller model, but when I went to the Microsoft store at my local mall, the larger version was being sold for the same $199 price, bundled not only with Office and the cloud storage, but with a $25 gift certificate to the Windows app store.
Despite the low price, Stream does not feel cheap, which is part of why I picked it over the other sub-$200 Windows 8 laptop being sold by Microsoft in its stores, the ASUS X205TA-UH01-BK Signature Edition. In addition to the bold color choice, Stream offers a keyboard with a good feel that's easy to type on and a decent, but not spectacular screen, on which I watched part of a movie (Joseph Gordon-Levitt's Don Jon). You won't mistake the screen for a theater, but in normal lighting conditions, it's fine, and for a slow-moving movie, the experience was acceptable.
And that's how it is to do most things with the Stream: "acceptable." It's not a speedy machine or a powerful one, but it's lightweight and runs Office well. Using Windows 8.1 without a touchscreen remains the same challenge it is on any non-touch-equipped computer, but that issue has nothing to do with price or processor power.
The only glaring problem with the device is its track pad, which is unresponsive to the point where it's barely usable. That can be corrected with an external mouse, which is possible since Stream offers one USB 2.0 port, one USB 3.0, one full-size HDMI, a headphone jack, a full-size SD card slot, and a Kensington lock slot along with a 720p webcam, which is fine for Skyping, if you don't mind your picture looking less-than-crystal clear.
The bottom line
For under $200, Stream makes a perfect secondary laptop. It's fine for web browsing, and Office runs as well as it does on much pricier machines, though you may want to avoid having multiple programs open at the same time. I'm not sure the plastic body will prove durable enough that you would want to use it as a work machine eight hours a day, but I'm comfortable giving it to my 10-year-old for his daily use.
It's no replacement for my more expensive Dell, nor my much pricier Apple MacBook Air, but I've used it for work with no problems, and it performed acceptably connected to Starbucks Wi-Fi with multiple browser tabs open at the same time.
Machines like the Stream make Chromebooks irrelevant and simply no longer needed. A decent Windows machine for $199 with Office included is a better deal than a Chromebook in the same price range, and Stream is on the high end of decent, bordering on pretty good.
Daniel Kline owns shares of Apple and Microsoft. The Motley Fool recommends Apple, Google (A shares), Google (C shares), Intel, and Starbucks. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), Intel, Microsoft, and Starbucks. 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.