Google’s developer conference generated a flood of news, which was a bit of news itself. There was a time when big announcements were linked to industry events like trade shows, but the new trend to link them to developer meetings shows a new dynamic in the industry. Actually, it shows a re-validation of an old one. In 1982, the PC wasn’t an objective competitor to Apple’s line, but it was an open platform that encouraged developers and even hardware add-ons at a time when Apple was at best reluctant in that space. (CIMI was an integrator at the time, and we could not join Apple’s developer program.)
The second major thrust in the Google stream after Android was Chrome OS and the “realization” of its thin-client promise. I put that term in quotes because the release of Chromebooks did instantiate a Chrome OS promise, but it may not have fulfilled it. The Chromebook has the features that were expected, meaning that it’s a thin client that integrates tightly with Google Docs, it provides a client for desktop virtualization (Citrix demoed this) for access to Windows apps, and you can even buy it on a license program, almost like a set-top box, bundled with the Google business services. So what’s not to like?
Well, for one thing, the price.
There were speculations that Google might offer Chromebooks for a small annual increment over Docs, which would make it a compelling deal. They didn’t; a Chromebook/software package would cost a business about $350 per year. If you bought the Chromebook outright, the price would be over $400, which is more than low-end Windows laptops and almost twice the price of some netbooks.
The value proposition here is vastly complicated by the price, of course. If a Windows laptop costs less than a Chromebook, then how long will it take for the Chromebook to pay back? Obviously in capital cost terms, it never will. Yes, you can argue that you save more on the Google replacement for Office, but the problem is that you can run that replacement on a Windows laptop too. The same goes for thin-client apps. And if you need Windows virtualization you need Windows, and if you have a Windows laptop instead of a Chromebook, you have it already.
The Chromebook launch, in my humble view, is a fiasco for Google. They’ve taken a promising notion, a cloud client, and created a market entry strategy that most companies won’t be willing to adopt, which means they’ll have to fight their way back into consideration at some later date—or fail.
Larry Page needs to take some inspiration from Steve Jobs. Not only would Apple never have done a launch that lacked a compelling early value proposition, they would probably never have done this sort of deal to start off with. Why has Apple, who aspired to enterprise success for literally decades, have failed to grab onto the thin client brass ring, unless it wasn’t really a brass ring?
The problem is that hardware and software costs are declining. If you can build a netbook for less than a Chromebook, including hard drive and a Windows license, then you’re charging too much for the Chromebook, you’re trying to pad your profit margins. Apple knows that you never want to get into a business that’s commoditized from the start. Sure, there are always price wars, but not at market entry! At least not for companies that need higher margins. Google’s Android model, where somebody else has to make and sell the box, is also the Chrome OS model, and the failing here is clear. Manufacturers of PCs have nothing to gain by pricing Chromebooks aggressively and reducing their own profits.
But whether Chrome OS succeeds or fails in the long run, it’s clear that what it will do is crystallize the thin-cloud-client picture. There are benefits to pulling complexity off the desktop, just as there are benefits to substituting tablets for laptops in the consumer space. If what you want from the computer you use is simply an online on-ramp, then strip off the junk that’s not essential to that mission and create a cheap device that’s cloud-dependent. If that proposition is valid, which tablet sales show it is, then cloud services are literally the way of the future. All of networking will collapse into hosting services in some way. All network operators will become cloud providers, or they’ll sink into financial ruin. All equipment vendors will become cloud equipment providers, or they’ll follow that same path.
Another dimension of Google’s developer conference also impacts the computing space, though. Android is a Linux variant. One of the major problems Linux has had is a lack of good desktop software. Another is a lack of reasonable support. Android, especially given Google’s broadening vision of the devices it runs on, could become a kind of next-gen Linux distro, competing with SUSE, Ubuntu and the rest. With Google behind it and a broad population of devices supporting it, Android could capture more interest as a desktop and laptop OS. My surveys and modeling show that if you could make LibreOffice run truly equivalent to Microsoft Office, and if you had good video and photo editing software on Linux, you’d end up with something that could make users abandon Apple and Microsoft.
That’s what I think is the craziest thing about the Chrome OS picture. Why would Google push a computer replacement by a thin client as they expand the value of their premier OS as a platform for computing? If Google wants to hurt Apple and Microsoft, pair Google Docs up with LibreOffice, launch Android as a PC operating system, port Picasa and some video tools, and then offer it to hardware vendors. You can’t win in PCs and eliminate them at the same time, Larry!