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Why Prices Of Google’s Cheap Chromebooks Will Rise In The Long Term

Jason Chen, CEO of Acer, gestures during a news conference at the IFA Consumer Electronics Fair in Berlin. (Krizstian Bocsi/Bloomberg)

© 2014 Bloomberg Finance LP

Chromebooks, the lightweight PCs powered by Google’s Chrome operating system, have earned a name for low prices since they started selling in 2011. Prices per PC around $200 are normal, and one model is now selling for $180 in U.S. stores, according to this tech media report. Fellow tech news site CNET calls the Chromebook an “inexpensive, streamlined alternative to a Windows laptop or Macbook.”

But over the longer term, Chromebooks will get more expensive, according to the pioneering developer Acer. That’s because they’re taking on more features, including touchscreens, and appealing more to markets with the money to spend instead of just schools. At the same time, Google is upgrading the operating system.

“My general expectation over the next two years would be for Chromebook prices to trend upwards as we have begun to see vendors introduce a few premium (units) into their portfolios, while there has been greater experimentation with innovations in form factor and touchscreen user experiences,” says Ishan Dutt, analyst with the tech research firm Canalys.

Acer is pricing above average

Acer’s average selling price already exceeds the market average, a company spokesperson at the suburban Taipei headquarters says. That’s because Acer is adding to its “innovation” and public schools, the Chromebook’s core clients to date, are starting to want more than cheaper basic models, according to the spokesperson.

Acer describes as “premium” a pair of Chromebooks, the 714 and 715, that Acer showed in April at an event in New York. They come with back-lit keyboards, and the 715 has a dedicated numeric keypad. Both models target business consumers, Acer said in a statement. They will sell for $499 when they reach markets in July, CNET says.

More on Forbes: How Once-Ailing PC Brand Acer Became The Top Seller Of Chromebooks

Acer hooked up with Google in 2008 to develop the original notebooks that run on the Silicon Valley giant’s speedy, cloud-based Chrome systems. Acer, the world No. 6 PC vendor as of the first quarter of 2019, held the largest share of the Chromebook market among vendors in 2017, though its 26% share last year came in behind HP’s 31%, per Canalys data.

Acer announced May 8 a first-quarter net profit of NT$706 million ($22.8 million) on revenue of NT$54.7 billion along with an increase in “the average selling price” of its PCs across categories. Acer does not disclose revenue figures for Chromebooks, but per this report, sales from the PC subclass grew 30% year-on-year from January through September 2018. Acer’s CEO Jason Chen has called Chromebooks a key revenue source along with gaming PCs.

Acer as a trendsetter

Acer is not the only company expecting a hike in Chromebook prices, analysts believe. Except for units that reduce the quality of certain specs for schools, “Chromebook brands are set to raise product specs to extend their reach from the education market to the consumer market with higher price tags,” says Sagitta Pan, a senior industry analyst with the Market Intelligence & Consulting Institute in Taipei. Business users, basically, can afford to spend more.

Google’s improvements to ChromeOS to catch non-school users will further raise Chromebook prices, Dutt says. In 2017, Chromebooks made up 60% of all PCs sold to American schools.

Chromebooks, 15 million of which sold across brands in 2018 with forecasts for at least 13 million sold this year, will keep reaching schools but increasingly tap other users, forecasts Linn Huang, a research director with tech market analysis firm IDC. “The shift of the market mix away from education, which has traditionally shopped in the bargain section, to other segments is pulling up the aggregate product mix, and constantly pricing,” Huang says. “Even in education, we’re seeing schools move up to…features such as convertibility and touch.”

Google Inc. Chromebook laptop computers sit on display in front of a sign featuring the company’s logo at the company’s Asia-Pacific headquarters in Singapore in November 2016. (Ore Huiying/Bloomberg)

© 2016 Bloomberg Finance LP





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