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TheStreet Open House

The Lenovo Chromebook: Another Nail in Microsoft's Coffin

Stocks in this article: MSFTLNVGYGOOGIBMGMTSLAQCOMNVDAINTC

A Windows PC may be only $500 or so to buy, even though software and warranties can often almost double that price. But that does not tell the whole story. Over a Windows laptop's three-year life cycle, it may cost thousands of dollars for a large enterprise to support this PC: $500 or $1,000 on Day 1 looks more like $3,000 or $4,000 cumulative spending over three to four years.

For this reason, CFOs, more than anyone, are looking primarily at cutting the cost that happens after the initial $500 or $1,000 purchase. It's okay if a laptop costs $500 or more if it doesn't require any maintenance, so the IT department can be fired or at least extremely significantly reduced.

Solution: The Chromebook.

A Chromebook doesn't require any money spending after the initial purchase. It doesn't get viruses, it doesn't need software installations. Upgrades are automatic. Everything is backed up automatically. Different users can work it, and nobody messes up another person's settings or work.

Chromebooks have become popular in schools over the last year. Give a kid a Windows or Apple laptop, and chances are that within a couple of minutes all settings will have changed, applications have been installed, and viruses have attacked and metastasized. By the end of the day -- or sooner -- the school's IT department may just as well re-image the whole PC.

Which is what they often do every night.

With Chromebooks, all of these problems -- i.e., cost -- went away in these schools.

Now, CFOs in non-education markets are taking note of how these schools have so dramatically reduced their cost of supporting PCs. Why should a regular traveling white-collar worker who is using his laptop for email, surfing the Web and basic word processing have a Windows PC requiring an IT back office for device support?

With a Chromebook, he doesn't.

With a Chromebook, the IT cost is $500 or less on Day 1, and not a penny more for the rest of the three years. You may have saved up to 80% of the three-year cost.

So far, Samsung and Acer have been the companies offering Chromebooks, ranging in price from $199 to $449. From an enterprise's perspective, these companies are not their traditional PC suppliers. They are more consumer-focused, which was okay in the education market.

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