While a niche offering today, open source Chrome OS is likely to follow Android’s success – and IT decision makers should plan on evaluating Chrome OS-based devices for at least some portion of their user base in the next twelve to eighteen months.
As PC World’s Ian Paul reported earlier this week, Dell revealed it is planning to utilize Chrome OS as the basis for future offerings. Details surrounding Dell’s Chrome OS plans, and more importantly, Google’s offer to PC makers, are still murky at best. However, it’s likely that Google will follow much of the same game plan as they did with Android.
Less than Free for PC makers is difficult to ignore:
Most readers are aware that the open source Android operating system is provided royalty free to device manufacturers. However, Google goes one step further – device manufacturers are actually paid to adopt the OS. VC Bill Gurley explains Google’s offer to mobile device manufacturers:
“….That’s right; Google will pay you to use their mobile OS. I like to call this the “less than free” business model. This is a remarkable card to play. Because of its dominance in search, Google has ad rates that blow away the competition. To compete at an equally “less than free” price point, Symbian or windows mobile would need to subsidize. Double ouch!!”
I would be surprised if Google doesn’t provide a similar offer for PC manufacturers to encourage the delivery of Chrome OS-based devices.
But Google is unlikely to stop there.
After the operating system itself, most IT decision buyers focus on is choosing an office productivity suite that meets their business needs, and employee skills. As this chart of Microsoft’s profit shows, the linkage, and combined success, of Windows and Microsoft Office is critical to Microsoft’s business.
Until recently, few could argue that MS Office alternatives were truly ready for everyday use. That is slowly changing – Google’s free SaaS-based Google Docs are increasingly becoming more enterprise ready by the week. In some respects, especially joint live editing within documents, Google Docs offers capability that many users of older Office versions would love to utilize.
According to Microsoft’s Office 2010 OEM pricing, Microsoft is charging PC manufacturers $2 per copy to preload Microsoft Office Starter Edition if they agree to preload other Microsoft components. The cost increases to $5 per copy if the manufacturer only wants to preload Office Starter Edition.
Google can offer Google Docs for free to PC manufacturers, thereby saving the manufactures millions in the long term versus Microsoft licensing fees for MS Office preloads. Google could potentially offer PC manufacturers incentives related to Google Apps users that upgrade to Google Docs on a given Chrome OS-based device. The net result will be higher profit margin potential for PC manufacturers considering Google Chrome OS and Google Docs.
Astute readers will note that the potential success of Chrome OS is poised to negatively impact Microsoft and desktop Linux vendor revenues.
One could question whether Chrome OS and Google Docs can in fact succeed against Microsoft Windows and Microsoft Office where so many other vendors have failed. The combination of Chrome OS plus Google Docs/Apps provides an interesting user experience that sets the combination apart from previous OS and office productivity alternatives. However, the most important factor is the profit motivation for PC makers. For instance, vendors offering desktop Linux or open source office productivity suites, can at best, provide a free offering to build from. These vendors cannot offer the revenue potential linked to search revenue that Google can offer. The “less than free” price point is difficult to ignore, and for other smaller OSS vendors, compete against.
Choose roll out candidates with caution:
Driven by PC maker’s profit motives, IT buyers need to plan for the inevitable future where some portion of their user base will be well served with a Chrome OS-based device.
In some respects, the growing trend towards Web-based applications makes is increasingly easier to move some users off a traditional OS and fat-client applications. For instance, of the eight applications I am currently running in the background as I write this post, there are exactly zero applications that either do not, or could not, run inside of a browser alone. I am not alone in this respect.
To be fair, and sane, few IT decision makers will roll out a Chrome OS and Google Apps-based PCs across their entire enterprise in the next twelve to eighteen months. The lack of enterprise manageability and control with Chrome OS is more than likely to be missing when these devices first hit the market. But that is a point in time statement.
IT decision makers should consider initial roll outs to specific groups, such as external facing customer service representatives, or within branch offices. Consider a pilot project with Chrome OS and Google Docs, or Google Apps, on existing, older, PCs to evaluate whether a future Chrome OS PC will be a good fit for some of your user base.
Plan ahead now – because if Chrome OS tracks Android adoption, at the manufacturer and user levels, you’ll be forced to into the evaluation by your vendors, and maybe even your users.