Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google isn't planning to ditch Chrome OS. The search giant reiterated its commitment to the web-based operating system in a blog post earlier this month, plainly stating that there's "no plan to phase out Chrome OS."
The post was prompted by a wave of reports alleging that Google intends to fold Chrome OS into its other, far more successful operating system, Android. Google's engineers have been working for the last two years to combine the two operating systems, according to The Wall Street Journal, and the search giant could unveil a single new operating system as soon as next year. Re/code followed with a similar report claiming that while Chromebooks won't disappear, traditional PC makers will soon have the option of using Android instead.
That's a claim Google didn't deny, and indeed, it seems likely. Chrome OS has enjoyed rapid growth in recent years, but its limitations are significant, and it hasn't found mainstream success. A version of Android designed for traditional PCs could offer a more compelling alternative to Microsoft's (NASDAQ:MSFT) Windows.
Chrome OS has enjoyed rapid growth, but its reach has been limited
Chromebooks -- laptops powered by Chrome OS -- have seen their sales surge in recent years. In 2013, they shot to the top of Amazon's sales charts: two of the three best-selling laptops that holiday season were powered by Chrome OS. To this day, the best-selling laptop on Amazon is a Chromebook. Chromebooks have also found success with enterprise users, and educational institutions in particular. According to research firm Gartner, schools purchased about 72% of the Chromebooks sold in 2014. According to Google, there are more Chromebooks now being activated in U.S. classrooms than all other education devices combined.
Yet Chrome OS is still somewhat of a niche offering. Gartner believes worldwide Chromebook shipments will reach about 7.3 million this year. In total, around 290 million PCs could be shipped this year, which would give Google's operating system a market share of less than 3%, to say nothing of the hundreds of millions of Windows PCs still in use.
Chrome OS offers unparalleled security and ease of use. Chromebooks are dirt cheap, with solid performance and top-notch battery life. They don't require their users to install patches, and they don't need anti-virus software. Yet Chrome OS is, as its name implies, basically just Google's Chrome browser (with a handful of extra features). To be fair, Chromebooks can run a few Android apps (including Skype), but generally can't run most local software.
PC makers have tried using Android
Android, however, doesn't have that issue. Unlike Chrome OS, Android is designed to run local software, and there are plenty of apps available -- more than 1.5 million in the Google Play store. Nearly all are built for touch-based interaction rather than mouse and keyboard, but with the right nudging, Android developers may be willing to modify their software for a more traditional computing environment.
PC-makers have offered Android PCs in the past, but the concept has largely been a failure. HP's Android-powered SlateBook 14 made its debut last year. The machine was innovative if nothing else, but was widely panned by critics. Lenovo tried something similar with the all-in-one N308. Official sales numbers were never disclosed, but it's unlikely either device sold many units.
In both instances, reviewers found fault with the interface. "It's a pain to use with a mouse," wrote Engadget. PC-makers did little to modify the operating system, instead slapping Android largely unchanged onto traditional hardware, resulting in an inferior user experience Google probably never intended. But if it were to offer a version of Android with an interface similar to Chrome OS, it would alleviate that issue.
Windows 10 poses a threat
More than 80% of the smartphones sold last quarter were powered by Android, according to IDC. Could Google find similar levels of success in the PC market? Microsoft's Windows is deeply entrenched, and it's hard to imagine that changing in the near future. But Alphabet needs to put some pressure on Microsoft. The Redmond tech giant's control of the traditional PC market is starting to threaten Alphabet's core search business.
Last quarter, for the first time, Microsoft's search engine Bing achieved profitability. Microsoft's management credited Bing's deep integration in Windows 10 with the reversal in fortune. Bing powers Microsoft's digital personal assistant, Cortana, which is built into the Windows 10 task bar and also its browser, Edge. There are more than 110 million devices running Windows 10, and as the operating system continues to add users, Bing's popularity could continue to grow. "Bing's share is up to 20.7% of [the U.S. search market]... helped by Windows 10," said Microsoft CEO Satya Nadella on the company's last earnings call.
It wouldn't be the first time Google has modified Android for a different interface (Android Wear is Android for smartwatches; Android TV is Android for smart TVs and set-top boxes), but it could be the most significant.
Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon.com. The Motley Fool owns shares of Microsoft. The Motley Fool recommends Gartner. 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.