May 17, 2011

Google, in a new bid to diversify its way out of an overwhelming dependence on search ad revenue, has once again taken aim at a giant in another industry. Having disrupted the disruptor that is Apple in the smartphone arena, Google is now challenging Microsoft’s 800-pound-gorilla status in the enterprise market.

Chromebooks for Business, unveiled at the Google I/O developer’s conference in San Francisco, ties together a number of threads the company has been dangling — not the least of which its seemingly Quixotic venture into the computer hardware game. But with hardware partners Samsung and Acer, Google is doing what Google does best: create a mechanism (inexpensive netbooks) that increases dependency on its cloud ecosystem — just like its advocacy of high-speed Internet connections that support its core business.

But this time there is potential revenue attached to that other agenda, and a genuinely viable business model. For $28 a month (less for schools) you get everything you need in hardware, software and service — including machine upgrades. Those machines boot up in seconds, connect to WiFi hotspots effortlessly, can tap into Verizon’s 3G data network if necessary (at an extra cost) and are elegantly tied in with (what else?) Gmail, Google Voice, Google Docs.

Prototypes of the Chromebooks didn’t get a high-five from the tech press when they were first were doled out to a select few, and there were big questions then about why Google would want to be in a) a commodity business and b) in the segment seemingly threatened most by tablets. It just didn’t seem to make sense in the way Google’s run at Apple with Android did. Sure, cloud computing seems like the future, but maybe this is an idea whose time has not yet come.

Now that the final piece has fallen into place it seems like Google might be on to something. Part of the reason Chromebooks may work is the power of Pay One Price. With no hidden fees and sufficient customer support (more on that later) this is a real peace-of-mind play at a fraction of the cost of orbiting in the Microsoft universe.

There are lingering questions, though:

Why netbooks? Even though there is some conventional wisdom that this relatively new portable class is already being killed off by tablets, the data is unclear. It’s quite likely that the full effect of disruptive introduction of the iPad won’t play out for years, and that tablets and bare-bones netbooks will be road warrior’s dynamic duo at the expense of traditional laptops.

Why not tablets? Because they aren’t proven business tools yet — even Rim markets its Blackberry companion Playbook as a plaything. Even though every person in business seems to have a tablet, full-sized hardware keyboards remain the single most important business tool.

Why rent when you can buy, cheaply? Indeed, this program isn’t even available to consumers (yet), who need to shell out $350 and do not get support. But this is what makes it a clever enterprise play: you eliminate the original and upgrade cycle capital expenditures — and your IT department. Toss in not having to buy Microsoft Office licenses and the sort of small operations which already use Gmail and Skype will be thinking twice about buying Macs or Linux boxes. When it comes to larger companies, there are CIOs who are already talking up the cloud and who are at least willing to listen.

Google’s prospects are hard to gauge, and the big enterprise equipment and support players — Microsoft and Fujitsu — are probably not quaking in their boots just yet. Enterprise IT is a conservative, slow-moving beast which emphasizes stability over innovation.

The x-factor may be Google’s ability to provide a high level of pacifying support.

Google’s only other foray into the hardware game was a bust: The Nexus One was supposed to upend the mobile phones business and shatter the dominance of wireless carriers, but Google abandoned the project fairly quickly.

The main culprit? Customer service.

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