The Lenovo Chromebook: Another Nail in Microsoft's Coffin

NEW YORK (TheStreet) -- Many of us have had one. In fact, for those working for corporateAmerica, we have been issued one every three or so years for the betterpart of the last 20 years.

I'm talking about a ThinkPad laptop, of course. It was first made by IBM ( IBM) and in the last decade Lenovo ( LNVGY). It was black, had a greatkeyboard, a matte screen, and it remains the most reliable Windowslaptop around.

Each of those millions of Lenovo ThinkPads ran the latest version of Microsoft's ( MSFT) Windows. One could argue that the Lenovo ThinkPad wasMicrosoft's face of corporate America on the road.

In other words, Microsoft and the ThinkPad laptop were locked in armsagainst all PC challengers of the past, from Sun to Linux to Apple's ( AAPL) Mac. Brothers in arms, locked together in that sturdy black boxresiding on traveling corporate America's lap, it was Microsoft'sChinese defense wall.

This is about to change.

In 2013, Lenovo will break with its Microsoft Windows exclusivity andstart offering PCs -- laptops and desktops alike -- based on Google's ( GOOG) PC operating system, Chrome OS. Such laptops and desktops arecommonly called "Chromebooks" and "Chromeboxes," respectively.

Why is Lenovo doing this?

Corporate America, as well as some branches of government, are tryingto reduce their costs. IT is a growing part of their budgets, withpressures from the front office to deploy and pay for smartphones andtablets, in addition to PCs.

At the same time, the complexity of a Windows PC has grown beyond mostusers' capabilities to handle it. I'm told that as early as a dozenyears ago, Microsoft asked Excel users for feedback on what featuresto add. Supposedly 95% of the suggested new features for Excelwere...already in Excel. A Windows PC is simply too complex for mostregular users.

Once you have used your Windows PC for the first few days, weeks andmonths, it no longer takes 30 seconds to boot it up, but perhaps oneminute, then two minutes, then... My old Windows PC now takes at leastfive minutes to boot before it approaches usability.

Then you have the longest list of viruses and spyware. Many usershave no idea whether they have them, or how they may get them. It'san eternal -- futile? -- cat and mouse game to fight these scourges.

A Windows PC may be only $500 or so to buy, even though software andwarranties can often almost double that price. But that does not tellthe whole story. Over a Windows laptop's three-year life cycle, it maycost 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 cumulativespending over three to four years.

For this reason, CFOs, more than anyone, are looking primarily atcutting the cost that happens after the initial $500 or $1,000purchase. It's okay if a laptop costs $500 or more if it doesn'trequire any maintenance, so the IT department can be firedor at least extremely significantly reduced.

Solution: The Chromebook.

A Chromebook doesn't require any money spending after the initialpurchase. 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'ssettings or work.

Chromebooks have become popular in schools over the lastyear. Give a kid a Windows or Apple laptop, and chances are thatwithin a couple of minutes all settings will have changed,applications have been installed, and viruses have attacked andmetastasized. By the end of the day -- or sooner -- the school's ITdepartment 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 inthese schools.

Now, CFOs in non-education markets are taking note of how theseschools have so dramatically reduced their cost of supporting PCs.Why should a regular traveling white-collar worker who is using hislaptop for email, surfing the Web and basic word processing have aWindows 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 apenny 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 moreconsumer-focused, which was okay in the education market.

Why do I believe that Lenovo will now generate this crack inMicrosoft's enterprise Hoover Dam? Because I hear enterprises askingfor this product, that's why.

What I hear from enterprises sounds something like this: "We areready to try Chromebooks on 10% or 20% of our employees, in lieu ofWindows laptops. However, we are used to Lenovo's reputation andquality as a laptop brand, and we wish Lenovo would offer usChromebooks."

I've been hearing this sentiment increasingly since at least August2012. Surely these demands have been pinging Lenovo with increasingfrequency.

In a few short years, Lenovo has grown from $10 billion in annualrevenue to $33 billion in 2012. This doesn't happen to a companythat ignores requests from its customers.

Translation: The enterprise customers started demanding Lenovo makeChromebooks in 2012, so Lenovo will provide them in 2013 and beyond.

The Lenovo Chromebooks and Chromeboxes can be powered by x86 CPUs,presumably from Intel ( INTC), or by ARM processors from companies such as Nvidia ( NVDA) and Qualcomm ( QCOM).

On the laptop side, they will have 16 gigabytes ofsolid state storage, and be equipped with screens ranging in size from11.6- to 12.5- to 13- and 14-inch models. All equipped with thelegendary ThinkPad keyboard, of course.

Prices may start as low as $299, but for more premium and largermodels -- also with bigger batteries -- they could reach $399 and $499.That may not sound like such a bargain, but with the zero-maintenancemodel of the Chromebooks it's the multi-thousand-dollar costreduction over the next three years that counts.

When will Lenovo drop this stink bomb into Microsoft's living room? Idon't know precisely, but I'm guessing May 16.

Yes, this is likely bad news for Microsoft, and perhaps the HDDand SSD vendors given the modest requirements of a Chromebook. Intelmay keep a SKU, in principle, but it would be a far cheaper CPU soit is a loser, too. Companies such as Nvidia and Qualcomm may gainsome share.

The obvious winner here, though, is Google.

Apple? This can't be incrementally good news for Apple, but Applefanatics would never admit this, of course.

Speaking of never admitting something, the biggest critics ofChromebooks are those who have never used them. This isn't whollyunlike critics of the Tesla ( TSLA) electric car, or General Motors' ( GM) Chevrolet Volt -- thebiggest complainers are almost always those who have never used theproduct extensively. Among heavy users for all of these new products,customer satisfaction is usually extremely high.

With Lenovo's first Google PC, this will mark a milestone in computer history.

At the time of publication the author had positions in AAPL, GOOG, NVDA, QCOM, INTC.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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