Chrome Meltdown
Back on 05/07/2020 we noted that what was then a relatively new category of mobile device, Chromebooks, were seeing rapid increases in shipment expectations as the COVID-19 pandemic forced the public into isolation and the need for inexpensive mobile devices to remain connected became a necessary item for almost all and we noted the impact of various global government programs that tried to guarantee same to students who were unable to attend classes, particularly in Japan, where the trend had already begun due to smaller viral infections. By 3Q last year Chromebook sales had seen reductions, although the brand mantra was that any slowdown in Chromebook sales to consumers would be offset by corporate sales, as employees returned to offices, although the chart we showed in our 10/25/21 note (chart reprint below) indicated that Chromebook shipments had already peaked (1Q ’21) and had begun to decline, and a number of follow-up notes this year followed that trend.
Aggregated Chromebook Shipments - Source: SCMR LLC, Various
Expectations have now reached new lows for Chromebooks this year with the latest estimates from Gartner (IT) being for the sub-segment to see a decline of 30% y/y, helping to brag down the broader PC category (PC, MAC, Chromebook) by 9.5% after last year’s 11% y/y gain. With MACs flat and PC’s down 3%, the effect of the Chromebook decline is easily seen, especially against 2020’s ~300% y/y increase in Chromebook sales. The obvious factors are the reduction or end of the student mobile device programs in a number of countries and the macro factors that are affecting consumers across the globe, but Chromebook brands are also dealing with the effects of the massive order pull-ins that fed the Chrome book cycle in 2020 and early 2021.
While there are still those who might buy a Chromebook as an inexpensive substitute for a laptop, much of that demand has already been filled, which leaves only the demand of what would have been ‘new’ Chromebook customers before the pandemic, and just looking at last year’s shipment chart gives some understanding of what actual Chromebook demand might have been before COVID-19. We do believe that Chromebooks are now a viable alternative for those that do not need the computing power and storage of a laptop, but we expect Chromebooks will have to create more differentiation between themselves and both tablets and laptops/notebooks in order to regain some market stature.
We expect this will take the form of more cloud based Windows or iOS based applications that can run well in the Chrome environment, a process that needs developers to continue to support the idea of Chromebooks, with much of that in the hands of Google (GOOG) as the driving force behind the OS and offering less onerous fees and payment options goes a long way toward that end. We have looked at Chromebooks a number of times as alternatives to more expensive Windows-based devices but, at least in our work, we need more of an ability to manage applications and storage locally, although a generation that has already lived and died by their smartphones will likely have less compulsion for that kind of control, giving Chromebooks a chance to grow again when the macro environment stabilizes.
While there are still those who might buy a Chromebook as an inexpensive substitute for a laptop, much of that demand has already been filled, which leaves only the demand of what would have been ‘new’ Chromebook customers before the pandemic, and just looking at last year’s shipment chart gives some understanding of what actual Chromebook demand might have been before COVID-19. We do believe that Chromebooks are now a viable alternative for those that do not need the computing power and storage of a laptop, but we expect Chromebooks will have to create more differentiation between themselves and both tablets and laptops/notebooks in order to regain some market stature.
We expect this will take the form of more cloud based Windows or iOS based applications that can run well in the Chrome environment, a process that needs developers to continue to support the idea of Chromebooks, with much of that in the hands of Google (GOOG) as the driving force behind the OS and offering less onerous fees and payment options goes a long way toward that end. We have looked at Chromebooks a number of times as alternatives to more expensive Windows-based devices but, at least in our work, we need more of an ability to manage applications and storage locally, although a generation that has already lived and died by their smartphones will likely have less compulsion for that kind of control, giving Chromebooks a chance to grow again when the macro environment stabilizes.
RSS Feed