Chromebooks and the Low-Cost Laptop Collide

At the HP analyst meeting in Boston, I was intrigued by two products showed by its Personal Systems Group. As you may know, HP is going through a major turnaround and for some time it was unclear how committed the company was to the PC business. Under its last CEO, in fact, HP was actually looking to sell its PC business. When Meg Whitman became CEO, however, she made a commitment to PCs. Since then, HP has been trying to innovate around various PC and tablet form factors.

The two products that caught my attention were the new Pavilion X360 laptop, which is similar to Lenovo’s Yoga design, and its updated Chromebooks. What makes the Pavilion X360 so interesting is its price of $399, which includes an Intel Baytrail Pentium class processor, 4-gig DRAM and a 500-gig hard drive with an 11.6-inch HD screen. During the event, HP also highlighted its new Chromebooks, priced between $250-350, depending on the configuration.

Various PSG managers and VPs told me that Chromebooks are very popular in education markets, as well as the consumer market, where people understand the role of the cloud and just want a cheap laptop for Web browsing, Web services and Web apps. This latter group of consumers is growing and HP is very pleased with the uptake in sales of Chromebooks to both groups.

But HP wanted to have some Windows laptop replacements for previous low-end laptop models. With this in mind, at Mobile World Congress (MWC) last week, the company announced the Pavilion X360, which caught a lot of people’s attention because of its attractive price and robust capabilities. Add the Yoga-like features—so it becomes a tablet, too—and you can see why it got a lot of media attention. In fact, it even won PC Mag’s Best of Show Award this year.

As I looked at these products side by side, it was clear to me that they are on a collision course, at least to some degree. In terms of price, the two are so close that from a consumer or even educational buyer’s standpoint, the bump up to a Windows 8 system is almost negligible. More importantly the X360 is much more versatile from a hardware standpoint. The fact that it can run any Windows application further enhancess its perceived value.

To be sure, Chromebooks are not going away any time soon. Google and its partners are highly committed to them and they will continue to be a good option for education and a lot of people who would only use the device for Web browsing. But the appeal of having a fully loaded PC with a 500-gig HD—in combination with a relatively fast and power-efficient processor—for just a little more is certainly compelling.

HP also showed off the 6- and 7-inch Phablets it introduced at MWC India. Although HP seems to have no interest in getting back into the phone business in the US, this phablet is scheduled to be introduced in Europe this summer. An Android-based phone, it is priced very aggressively. The 6-inch model is priced at 249 Euros, while the 7-inch model is 299 Euros. These are unlocked phones with two SIM card slots for dual communication capabilities.

These new products suggest to me that HP is much more serious about its PC business now than when I met with people from the company last year at this time. They are also working hard at innovating around PC and tablet platforms. While I myself am mainly a MacBook Air user, I personally would buy the X360 as my home Windows 8 system for use with Windows apps that I need every so often. I wouldn’t go so far as to say that HP is completely back and not going to experience bumps in the road in the future. But last quarter’s financials were solid and positive. My observations of the PSG group suggest to me that it is back on track and serious about PCs again.

One last note from the HP event. I had the opportunity to chat with CEO Whitman, at which time I asked her about something she said in her opening presentation. She confirmed that HP now has $9 billion of free-flow cash in the bank and zero operational debt. This is a far cry from the company’s financial situation this time last year and very good news indeed for this Silicon Valley hi-tech icon.

Published by

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

4 thoughts on “Chromebooks and the Low-Cost Laptop Collide”

  1. Hi Tim,

    What do you make of the report that Google is nixing all planned combo Android/Wintel devices?

    1. Not that I am Tim, so I guess this is unsolicited, but this is a public-ish forum. I think Google sees this several ways. 1st, Google understands how poor an experience Android will be in a PC form, even as a convertible, which is why they are focusing more on ChromeOS.

      2nd, MS needs Android more than Google needs Windows, and putting Windows next to Android in a PC form will only strengthen Windows, not Android. And it puts Android in a position to loosen Google services users to Windows.

      I also think Google sees the PC as becoming more of a mobile OS accessory. Smartphones, laptops, and other mobile devices used to be seen as accessories to PCs. This is shifting on a global scale, especially as more people are introduced to computing through either a smartphone or a tablet. Any future for PCs will be as either niche power user needs or as an accessory to people’s smartphones and tablets. Android does not need to be on a PC, especially when Google has a far more PC centric OS available that still integrates well with Google services and vision of the PC.


  2. I see Chromebooks as a replay of the linux based netbooks. What happens in the end is pretty apparent by now. The difference is that this time, Microsoft was slow to take action, presumably because it was distracted by tablets.

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