Google (NASDAQ:GOOG) Inc. is a household name across America. Whether you're trying to search, shop, socialize or do just about anything that requires technology, Google offers it. If the company is anything, it is diverse. Google even made the world's most popular phone OS in Android. Google has continued to expand itself into different facets of the economy, usually successfully. Google released the Chromebook back in the summer of 2011 to mixed reviews. The product has gained traction since then, and serves as a reminder of just how well Google understands trends in our tech-driven world.
The Almighty Cloud
You can't walk down a street without hearing someone blurt out a comment about "the cloud." Cloud computing involves the pooling of computing resources through the Internet. Using the cloud, you can have data processed for an application by a server hundreds of miles away. The growing amounts of connections between computers have begun to change the nature of computing itself. While traditionally you might need to store all of your data locally, the cloud has allowed you to store all of your information directly on the web. This allows you to access that information through any internet-connected device, which is basically every piece of technology that you come into contact with on a regular basis. The technology also keeps your information safe; you might drop your laptop and break it, but you're not going to break the whole Internet.
So what does the existence of the cloud mean? It means that computers, as well as computing power, are becoming less important. All that you need is an Internet connection, and you have endless data and processing capabilities at your fingertips. Google evidently believes in the cloud. Their Chromebook is a device designed for the Internet. There are currently five iterations of the device, but all of them are wildly similar. They are all remarkably thin, with very little hardware crammed in. Chromebooks don't have a lot of RAM or beefy video cards; they simply have Internet functionality. Google wants you to get online as fast as possible. Several Chromebooks offer a "solid state drive." Different from a regular hard drive, solid state drives allow data to be retrieved much faster. Their capacity for storing information, however, is much lower. Google offers you free online storage in order to compensate, but it knows that soon storing your files locally will be a thing of the past. With the ability to remotely store all of your information, why do you need a big hard drive? You don't.
The Chromebook is in a category of device called a "netbook." The thing is, no one is buying netbooks made by anyone except Google. No one can argue that these Internet-focused devices are the future. Yet the market for them has been collapsing in on itself. In Q4 2011, Dell stopped manufacturing netbooks. On the first day of 2013, Acer and Asus both announced that they would also stop manufacturing netbooks. Obviously, they weren't selling. Yet Google's Chromebook has been on Amazon's bestseller list, climbing as the high as the top 20. It seems that Google has wiped out the rest of the market with its product.
A Misstep By Microsoft
Microsoft (NASDAQ:MSFT) has arguably created the most famous operating system ever when it first released Windows. The company has recently chosen to completely overhaul its latest product, dubbed Windows 8. Windows 8 looks like something designed for children: bright, colorful icons litter the screen in a seemingly random array. Any professional that looks at Windows 8 wonders how he's going to do work on it. The numbers present a troubling picture: no one wants Windows 8. People are flocking to legacy versions of Windows in order to use their computers. A diagram from technology blog Extremetech shows how Windows 8 has only captured 2.7% of the market since its release date.
Microsoft fundamentally altered its product, and it seems like it miscalculated. This leaves the door open for other operating systems, especially those that are Internet-based, to step in.
Apart from the luxury Chromebook Pixel, a Chromebook runs between $200-$500. Compared with the prices offered by computers with Windows and Mac OSX, Chromebooks are dirt-cheap. Soon people will realize that they have absolutely no use for all the hardware in their machine, as all of their computing will be done solely on the Internet. It is then that the Chromebook will become that much more popular, offering the same experience for a fraction of the price.
I believe that Google has aptly identified the trends present within the mobile computing industry. Consumers will stray from hardware as devices become that much more portable and Internet-dependent, and the Chromebook will lead the pack in sales. Going long Google is (always) a safe bet.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.