The argument that Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Chromebook will somehow rule the PC space doesn't really seem justified at the present moment, and while the data from NPD Group could be accurate, I have found that data from other sources clearly contradict the penetration rate for the Chromebook.
Here's why Google isn't dominating the PC market
Here's the data that was provided by the NPD Group:
Since the start of the year (January - May), Chromebook sales within the U.S. Commercial Channel increased 250 percent year-over-year and accounted for 35 percent of all channel notebooks sales. According to The NPD Group Distributor and Reseller Weekly Tracking Services.
The data is based on U.S. sales channel data. It doesn't apply to the broader macroeconomics of the whole entire PC space. Nor is it inclusive of direct to consumer sales. Gartner's estimates on Chromebook penetration is likely to be more accurate:
Sales of Chromebooks* will reach 5.2 million units in 2014, a 79 percent increase from 2013, according to Gartner, Inc. By 2017, sales of Chromebooks are set to nearly triple to reach 14.4 million units. While Chromebooks are primarily used by the education sector, they will also have a place in businesses for specific workers, such as staff in banking, financial services, estate agents and hotel receptionists. "So far, businesses have looked at Chromebooks, but not bought many," said Ms. Durand. "By adopting Chromebooks and cloud computing, businesses can benefit; they can shift their focus from managing devices to managing something much more important - their data."
Chromebooks are a niche device. It's primarily used for web surfing, and in some cases it may apply in the enterprise depending on whether or not software has been made available via the cloud. The device won't run any killer applications, and it's not oriented to consumers in developed markets.
However at the price point, it may appeal to consumers in emerging markets as an entry-level PC. But in the emerging markets, Microsoft (NASDAQ:MSFT) is much more price competitive with its own tablet lineup, so Google hasn't dominated this segment of the market, and it's dubious as to whether OEMs have any incentive to push $200-$300 ASP Chromebooks over products that have higher margins and higher ASPs.
Assuming Gartner's 5.2 million shipment figures are accurate, it would compose a very small sliver of the global PC market. Currently, Gartner estimates that PC vendors will ship 302 million PCs in 2014, so Chromebooks will have 1.7% of global market share by the end of the year.
Granted, this product catgory is expected to grow by 79% y-o-y, which is a pretty astounding growth rate, and any incremental addition to top-line results can be interpreted positively by Google shareholders. However, I would lower my expectations over the scalability of the opportunity presented by Chromebook. Going forward, Google's success will be contingent upon ad-monetization, Google Fiber/Satellite, and the Android PlayStore. The combined impact of these segments, paired with display (programmatic/native) ad properties like YouTube, Gmail and navigation, all will continue to be the key pillars of Google's growth going forward.
Chromebooks are growing at a fairly high rate, but they're not saturating a very large percentage of the broader market, and I don't think Chromebooks are intended to be a PC killer. However, Chromebooks are great for web surfing, despite the limited application ecosystem.
Google may have found pockets of growth in the commercial markets, and certain education institutions may adopt the device for cost reasons. However, it's doubtful that the Chromebook will become a mainstream consumer device based on specifications and outward looking projections.
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