Chromebooks Sell Well, But Not to Businesses

Early indications are the Google Chromebooks produced by Acer and Samsung are selling well enough to stave off the “flop” label. But all sales are flowing through retail. Just when Chromebooks are coming to the channel for business sales is anyone’s guess, including Google’s manufacturing partners.

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Here’s the good news for Google fans: The Chromebooks laptops built by Acer and Samsung are selling well a month after their debut. It’s not iPad sales numbers, but – as CNET reported – the Acer's 11.6-inch, $349 Chromebook is in the top five bestsellers on Amazon.

[caption id="attachment_2481" align="alignleft" width="300" caption="Google's Chromebooks -- built by Acer and Samsung -- are selling well enough through retail channels. The question remains when these devices will hit the B2B channel."][/caption]

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CNET correctly qualifies the Amazon bestsellership as not being a true barometer of Chromebook sales. Nevertheless, the strong showing does stave off any contention that Chromebook is destined to be a flow.

The question remaining is when Chromebooks will come to the business-to-business channel.

“The silence is deafening,” said Gregg Prendergast, vice president of commercial sales and marketing at Acer America, in an interview with Channelnomics. “It’s a wait-and-see situation, as the launch is directed at the retail channel with [Acer and Samsung].”

Google developed the Chrome operating system over the last two years with the intent of taking on market-leader Microsoft’s vaunted Windows. Chrome debut last month to strong reviews for its technical features and performance. Google changed the game, though, by not selling Chrome under a one-time license, but rather as a monthly subscription fee of $28.

With the subscription, Chromebook users will receive automated software updates, security patches and routine maintenance. Google contends the recurring payments will ultimately yield a stronger return on investment for users.

In an interview with Channelnomics in May, Jeff Ragusa, lead for the Google Apps channel, said the plan was to launch Chromebooks through retail partners aimed squarely at consumers. After the summer-long launch period, Google would begin selling the devices to businesses through its Google channel partners.

What Google hasn’t figured out is how to sell its Chromebooks through the conventional B2B channel. Ragusa said in the previous interview that Google was working on the logistics for selling and supporting Chromebooks through its partners and the partners of its device manufacturers.

The relationship between Google and its manufacturing and retail partners is unknown. Chances are Google is selling Chromebooks in a model similar to smartphones – in which it compensates partners for selling at a loss on the bet that it will recoup the revenue and more on recurring subscription sales. The retail sale price of an Acer Chromebook is $349. The subscription cost to the end user over three years is more than $1,000.

If that is the case, and maintenance and updates are included in the subscription, Google is probably having a hard time coming up with a revenue model that makes sense for it and its partners.

While Acer has no Chromebook products to sell its business customers, Prendergast says there’s strong interest among colleges and secondary school systems looking for a light-weight, Internet-connected device that has a strong battery life. When Chromebooks do become available to the B2B channel, they will find a strong reception in the education sector.

Undoubtedly, the Chromebook arrives amid strong competition from conventional laptops, operating systems and tablets. Hewlett-Packard is pushing its new TouchPad tablet powered by webOS as an alternative to the Apple iPad and the plethora of Android-powered tablets. Netbook sales are declining rapidly, but Acer reports interest in its netbook products remain strong. And Prendergast says sales of Acer’s new Android and Windows-based tablets are strong.

At this point, the channel will not see Chromebooks until sometime in the fourth quarter, and then only if retail sales remain consistent and trending upwards.

* * *

Lawrence M. Walsh is CEO and president of The 2112 Group, a technology business advisory service that specializes in optimizing indirect channels and partner relationships. He’s also the executive director of the Channel Vanguard Council. He is the former publisher of Channel Insider and editor of VARBusiness Magazine. You can reach him at lmwalsh@the2112group.com.

On Twitter:
Larry Walsh:@lmwalsh2112| Channelnomics: @channelnomics

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