30
Dec

Don’t put too much stock in Amazon’s list of top selling computers for the 2014 holidays

2-Color-Design-Hi-Res-100px-widthOn the day after Christmas, December 26, 2014, Amazon published a press release titled Amazon Prime Experiences Another Record-Breaking Holiday Season. This press release included a listing of the most popular purchases for the holiday gift-buying season. In the computer category the winner was the Acer C720 Chromebook.

Some writers made a point of this press release. Brooke Crothers wrote a piece for Forbes titled Chromebooks From Acer, Asus, HP Top Holiday Sellers On Amazon.

But a mere 4 days after the publication of this list, on December 30, 2014, the top selling laptop was an Asus running Microsoft Windows.

So what is the significance, if any, of the Amazon statistics? Readers approaching personal computers as pure commodities (I admit to membership in this camp) may want to note the decline in street price represented by these transactions and consider the impact, if any, on adjacent hardware computing form factors (namely tablets). But even by this measure the Amazon statistics can be misleading: the best selling computer device on the Amazon web site on December 30, as of 5:30pm, was the Kindle HD tablet, with a price of $99.00. So, is it, therefore, safe to say the street price for personal computing devices is now firmly established below the $100 mark? Further, does this mean we are looking at a substantially higher volume of devices sold?

I don’t think so. The dollar impact of all of these comparatively inexpensive computing devices is not, in my opinion, likely to mean much of anything good for the bottom line of manufacturers. Commodities are all about big volumes and very low margins. So all of these sales may amount to more of a headache for Asus and its competitors, than anything else.

But what about the impact of the volume of operating system (O/S) licenses associated with these sales? The Amazon press release identifies Google’s Chrome O/S as the winner. So is it safe to say Microsoft took a hit from the season? I don’t think so. Chrome is a cloud O/S. If, for argument’s sake, I buy into the notion Chromebooks were the real best seller for this holiday season, then the impact of choice associated with cloud (and the possibility some of these new Chromebook owners will opt for a personal subscription to Office 365) is a big factor rendering any call too early to tell.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

24
Feb

How Big a Role did Chromebook Sales Play in HP’s Last Quarter?

On February 4, 2013, HP announced the addition of an HP Pavilion 14 Chromebook to its product family. Several business quarters have passed since the announcement, but, HP earnings reports (and the webcasts of management presentations), to the best of my knowledge, have not included notice of significant sales of this product line.

HP’s latest quarterly earnings report and Q1 2014 webcast is no exception. Beyond a mention of what sounded like “multi O/S” device sales, there was no mention of how HP’s Chromebook products contributed to their revenue performance.

But there’s little remaining doubt about the Chromebooks vs. Windows laptops & notebooks competition. Chromebooks are making themselves felt, but, I think, in lower end consumer sales in the Americas and Western Europe, and, across the board, in emerging markets.

On Saturday, February 22, 2014, Tom Warren wrote an article titled Microsoft combats Chromebooks by cutting Windows licensing fees by 70 percent, which was published on The Verge website. Warren writes: “Microsoft is reportedly cutting Windows 8.1 license costs by 70 percent for PC makers. Bloomberg News reports that the cuts are targeted at devices that retail for less than $250, in a move designed to combat rival low-cost tablets and Chromebooks” (quoted from Warren’s article, a link to which has been provided in this paragraph). It’s not likely Microsoft would move forward on a price cut for its Window O/S if sales of Chromebooks were still little more than a ding to their bottom line. But just where may this impact be occurring, if not in familiar enterprise IT markets?

On December 29, 2013, in an article titled Chromebook Sales Punching Through And Gobbling Market Share, Seth Colaner writes ” … the NPD Group has some startling numbers on commercial computing device sales. From January-November 2012, Chromebook channel sales were negligible at just 0.2% of the total market, but this year over those same months that percentage leapt to 9.6% of all computing devices. They also accounted for 21% of notebook sales. Much of Chromebooks’ success appears to be at the expense of Windows-based machines, which is likely due to a combination of a lukewarm response to Windows 8 and Chromebooks’ significantly lower prices.” Colaner also notes strong sales of Chromebooks on Amazon.com: ” two of the three top-selling laptops on Amazon.com this holiday season were Chromebooks–specifically units from Samsung and Acer.”

Investors may want to factor this information into their view of Microsoft, specifically, to conclude Chromebooks have, indeed, become a meaningful competitor to notebooks running the Microsoft Windows O/S. As to whether Microsoft’s decision to cut the cost of the O/S for its OEMs is good, or bad news, it’s too early to say. The price cuts may, in fact, shore up sales in emerging markets and the lower end of the consumer market, which would represent a win for Microsoft. After all, the Chromebook appears to already own 21% of notebook sales, per Mr. Colaner, right?

Disclosure: I’m long Microsoft, but neither invested in Google, nor any other publicly traded business mentioned in this post.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved