New Google Chromebooks Are Designed to Invade the Business Market

After its success in the education market, Alphabet Inc's new Acer Chromebooks are the first step to take on Windows and Office in the business market

Source: Google

Alphabet Inc’s (NASDAQ:GOOGL) Google has proven a thorn in the side of Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) in the education market. Google Chromebooks have taken a huge chunk of that market, thanks to their low cost, easy maintenance and Google’s G-Suite productivity software.

Now the company is targeting the business market, and new Acer Chromebooks coming today will mark the start of that push to displace Windows and Office in MSFT’s core market. If successful, the move will help the company’s goal to reduce its dependence — and GOOGL stock’s dependence — on ad revenue.

New Acer Chromebooks to Kick Off Wave of Business-Friendly Google Chromebooks

Google Chromebooks took on education giants Microsoft and Apple, offering schools and students a much cheaper alternative to Windows laptops or iPads. The combination of Chromebooks, Google’s G-Suite productivity software and the easy management of the devices has proven incredibly successful in that market. Just seven years after their introduction, those Google Chromebooks now dominate with 60% of the U.S. K12 education market. And Apple and Microsoft are left trying to play catch-up.

Now Google is looking to the much more lucrative business market, where 90% of computers run Microsoft’s Windows operating system and Microsoft Office is king.

Yesterday, Google hardware partner Acer announced new laptops that offer big displays, durable aluminum cases and Intel Corporation’s (NASDAQ:INTC) latest 8th generation Core CPUs. These aren’t Windows laptops, these are new Acer Chromebooks and they are aimed squarely at the business users currently running Office on a Windows laptop.

Why Business Chromebooks Would be Good For GOOGL Stock

Google and its parent company Alphabet remain hugely dependent on ad revenue –nearly 85% of every dollar Alphabet makes comes from advertising. That reliance on a single source of revenue makes the company and GOOGL stock vulnerable to shocks.

So Google has been branching out with a cloud platform and hardware — including its Pixel smartphones, Google Home smart speakers and Nest smart home devices. This strategy also helps to re-enforce use of Google’s services (including Google Search and Google Maps), which in turn helps to maintain that lucrative ad revenue.

Sales of Google Chromebooks amount to a rounding error for company of this size, even with the Google Pixelbook starting at $999. But when it comes to the business market, things get interesting.

That Pixelbook becomes essentially a reference design for high-end Chromebooks. Google’s partners are going to start producing premium Chromebooks with similar specs. The new Acer Chromebooks are going to feature the durability, size and processing power that business users expect. With the hardware there — and a generation of Chromebook and G-Suite fans beginning to enter the job market thanks to their exposure to Google Chromebooks in schools — Google is positioned to take on Microsoft.

What Does the Business Market Mean to Google Revenue and GOOGL Stock?

Starting last August, the company began charging companies $50 per year per device for a management license. And G-Suite licenses for each business Chromebook user range from $5 per month to $25 per month. It adds up, especially with the hundreds of millions of business PC users out there that could eventually be up for grabs. On top of that, every Chromebook sold is further insurance that Google Search and other ad revenue-generating services will be used, instead of alternatives like Microsoft’s Bing.

All good for Google revenue and GOOGL stock.

Will Google’s strategy to take over the business world and unseat the Windows/Office giant succeed? The company will have to overcome decades of entrenched Microsoft dominance. But with hardware partners onboard to release new high-powered Google Chromebooks and the continued improvement of the Chrome OS and G-Suite user experience, Microsoft probably shouldn’t take anything for granted. Especially given what’s happened in the education market.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2018/05/google-chromebooks-designed-invade-business-market/.

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