CHROMEBOOKS ARE REPORTEDLY KILLING LOW-END PC LAPTOPS.
A new report suggests Windows PCs don’t just face a challenge from tablets and smartphones, but are increasingly under fire from within their own brand segment. Chromebooks, the web-based Google alternative to a Microsoft or Apple-powered laptop, have been slowly gaining ground since they debuted in 2011.
Chromebooks are just a fraction of the PC market, at 2.8% in 2015, but that’s up from 1.9% in 2014. That’s an increase of 47% in just a year — not bad for growth when the PC market as a whole continues to take a beating. In response, companies like HP and Dell are reportedly cutting their losses and mostly leaving the sub-$300 space. Acer, Asus, and Lenovo continue to offer some products from $180 to $300, but we may see these products gradually phase out if they don’t sell well enough to justify their own existence.
You could argue the surge in Chromebook sales is proof the venerable Wintel Alliance is no longer capable of defending itself, even on its own turf. After all, Microsoft and Intel may have failed to capture much of the mobile market, but they at least maintained a lock on the laptop and desktop industry. Chromebooks could threaten that lock, at least in the long term.
On the other hand, dumping the sub-$300 market could be the smartest thing Dell, HP, and the other OEMs have done in years.
Let’s Be Honest: Cheap Windows Systems Suck
I realize that the header above may sound a bit pejorative or unprofessional, but I’d challenge anyone to refute it. Anyone who has had to guide a friend or family member through a budget-restricted, low-end laptop purchase knows that the entire process is a nightmare. Because manufacturers often run specials or markdowns on specific SKUs, trying to identify the best system on any given day involves wading through a morass of nearly identical specifications. Many of these bottom-end systems have at least one “gotcha” — a terrible keyboard, an insanely sensitive trackpad, or a display with viewing angles so narrow, it accidentally doubles as a security window. Inexpensive systems tend to have more bloatware than more-expensive hardware, and often carry the fewest support options.
There is a difference between buying a no-frills budget product with solid basic performance and a bad laptop. All too often, inexpensive computer hardware crosses that line — and the cheaper you go, the worse it gets.
HP, Dell, and the other OEMs are all aware of this, of course. They’ve continued to offer these systems as a way of eking out tiny profits on huge hardware volumes and, I think, partly out of an institutional memory for a time when less expensive PC hardware was automatically equated with better PC hardware.
It’s hard to remember now, but there was a time when the race to the bottom of PC prices was seen as a unilaterally good thing for all involved. Consumer PC margins were shrinking, but volumes were growing even faster. I bought my first computer with my own money when manufacturers started offering $999 boxes without a monitor. As desktop and laptop prices fell, more and more people were able to get online for the first time. This was, and is, a very good thing, and I’d never argue for a return to the days when buying a computer meant slapping down a few grand for the privilege.
At some point, however, the model stopped working. Blame Microsoft’s “Windows tax,” or Intel’s high margins, or the OEMs themselves for being so willing to race to the bottom — it doesn’t really matter. What matters is the experience of using a low-end Windows laptop is often much worse than it objectively should be. Given that laptop average selling price (ASP) fell to $430 in 2014 and hasn’t budged much since, it’s reasonable to conclude the majority of Windows users are experiencing the operating system on these low-end systems.
Low quality OEM systems aren’t the reason why the PC market has slumped so badly, but it’s hard to get excited about buying a new PC when previous purchases have shown you that however nice the hardware seems out of the box, it quickly disappoints. The low-end PC experience is compromised in ways you don’t see with $199 to $299 tablets.
Let The Market Go
If HP, Lenovo, and other OEMs can improve their profit margins and their higher-end product lines by killing their lowest-cost hardware, I say do it — not because people on a budget shouldn’t be able to buy Windows computers, but because the current system doesn’t work for anyone. Consumers aren’t happy with the hardware they purchase, OEMs aren’t happy with their profit margins, and Microsoft wants people to actually wantto use its operating systems.
In the short term, this kind of switch would depress PC sales, but in the long run, it might well improve them. Give people a better day-to-day experience, and they’ll be more likely to replace aging hardware with devices in the same ecosystem. Hand them a consistently mediocre-to-terrible experience, and they’ll jump ship the first chance they get. We’ve already seen how people react to the mediocre-to-terrible option, so why not try building fewer PCs at somewhat higher margins, with hardware and software loadouts people want to use?
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