Hewlett-Packard, Toshiba and Acer will issue laptops priced between $199 and $249 for the holiday shopping season, all with wildly different specs—the Acer Aspire ES1, for example, will feature a 15.6-inch screen paired with a 2.16 GHz Intel Celeron processor, while Toshiba’s unit will boast an 11.6-inch screen. “We are going to participate at the low-end,” Microsoft COO Kevin Turner said during Microsoft’s annual partner conference this week, according to The Verge. “We’ve got a great value proposition against Chromebooks, we are not ceding the market to anyone.”
Microsoft has good reason for concern: In late 2013, research firm NPD Group issued a report that placed Chromebooks’ share of the commercial notebook market at 21 percent, a dramatic increase from a “negligible percentage” the previous year. “New products like Chromebooks, and reimagined items like Windows tablets, are now supplementing the revitalization that iPads started in personal computing devices,” Stephen Baker, Vice President of Industry Analysis for NPD, wrote in a statement at the time. PC manufacturers such as HP, perhaps curious to see if customers will gravitate toward hardware running Google’s Chrome OS, have produced Chromebooks at a variety of price-points, a fact that’s likely keeping more than one Microsoft executive awake long into the night.
But in pursuing the lower end of the PC market, Microsoft and its OEM partners set themselves up for a repeat of the netbook debacle of a few years ago. Although netbooks—ultra-cheap, underpowered laptops running Windows—quickly gained immense popularity soon after their release, the form-factor’s market share just as rapidly imploded with the debut of Apple’s iPad in 2010. Many consumers, tired of netbooks’ inferior performance, opted for sleek and light tablets capable of executing all the same functions—Web surfing, light productivity, games and more—at a comparably low price. In mid-2013, research firm IHS iSuppli predicted that zero netbooks would ship by 2015.
Even at the height of netbooks’ popularity, the devices’ low margins ate into manufacturers’ bottom lines. If Microsoft is serious about a new generation of cheap Windows devices, it will need to convince those partners that they won’t end up burned again. For consumers and businesses, though, a race to the bottom will probably mean even more low-cost options to consider.
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