Home > Uncategorized > Intel Wins From Surging Sales Of Chromebooks

Intel Wins From Surging Sales Of Chromebooks

Summary

  • U.S. B2B sales of Chromebooks posted a 43% sales increase in the first half of 2015.
  • Google is now offering more freebies to make Chromebooks more attractive to enterprise buyers.
  • Intel is still the biggest supplier of processors to Chrome OS computers.

NPD Group’s latest report reveals that Chromebook sales are still posting double-digit growth rate. Unlike the sharp decline in Android tablets (-8%) and iPads (-20%), the U.S. Business-to-Business ((B2B)) sales of Chromebooks posted +43% increase during the first half of this year.

The impressive performance of Chromebook sales has helped the Chrome OS/Android OS increase its share from 23% to 30% of the U.S. B2B sales to enterprise, government, and education markets.

This news is good for all Intel (NASDAQ:INTC) investors. We all know that Intel remains the biggest supplier of processors to Chromebook manufacturers. The U.S. is the biggest market for computer products.

The notebook/laptop form factor is also the most popular among U.S. buyers, with 42% market share.

On a global perspective, the rising popularity of the Chromebook is also helping small notebooks find more buyers than traditional 15-inch laptops.

IHS Inc. (NYSE:IHS) says Chromebook sales is also growing outside the U.S. market. The rise in global Chromebook sales is helping sales of 11-inch notebook displays grow from 8 million to 11 million units.

(click to enlarge)

Gartner estimates that global sales of Chromebooks will hit 7.28 million units this year, and 7.95 million by 2016. However, I see a higher number than Gartner’s estimates. This is due to Google’s (NASDAQ:GOOG) (NASDAQ:GOOGL) aggressive objective to expand the appeal of Chromebooks beyond the education market.

Google is now offering free VPN, file sharing, and virtualization features for itsChromebooks For Work program. This should help attract more interest from enterprise PC buyers in the U.S.

The education market was responsible for 60.3% of Chromebook sales last year. However, enterprise sales in the U.S. was only 1.1% of Chromebook sales. Enterprise sales of Chromebooks in Asia-Pacific region was much higher, at 16.5%.

The higher price tags of Chromebooks that Google wants to sell to business bodes well for Intel’s processor margins. Intel will benefit more if Google and its OEM partners could steal enterprise customers away from Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).

I’m pleased that Google is now also using the contra revenue tactic of Intel. Google is waiving the first-year $50/annual per device service to business entities that deploy Chromebooks or Chromebox computers.

(click to enlarge)

(Source: Google For Work)

The U.S. K-12 education market embraced the Chromebook because of thehuge cost savings. Compared to Windows or Mac computers, Chromebooks deliver up to 69% savings on installation costs and 92% savings on maintenance expenses.

The big savings possible from using Chromebooks is something that budget-constrained companies cannot ignore forever.

Even die-hard fans of the MacBook would find the Chromebook’s better return on investment attractive. Flannel Guy ROI estimates that using a Chromebook instead of a MacBook offers $1,776 in savings over a 10-year period.

(Source: Flannel Guy ROI)

Final Thoughts

INTC is a Buy. The rapidly growing popularity and higher average selling prices of Chromebooks make them more desirable than tablets. Unlike the contra revenue campaign on Android tablets, Intel is likely selling processors at a profit to Chromebook manufacturers.

Google’s hunger to penetrate the lucrative U.S. enterprise market for notebooks is a small but important tailwind for Intel’s notebook application processors.

Sales of Chrome OS computers to consumers might also get a boost once Google releases a user-friendly version of the ARC Welder developer tool. The ARC (App Runtime for Chrome) browser extension lets people install and run Android apps on Chromebooks, Windows, and Mac OS X computers.

However, the latest ARC Welder version still does not have 100% compatibility with some 3D Android games. The manual downloading and installation Android APKs via ARC Welder is also a turn-off to most ordinary non-geek users.

More people will likely consider buying a Chrome if only Google releases a one-click method to automatically install Android apps directly from the Play Store.

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