Could Google’s ChromeBooks Succeed In The Enterprise?

A couple of weeks ago I wrote that Google may have missed its “window” for Chrome OS netbooks (pun intended). That was based on my prior understanding of ChomeBooks as an affordable “second computer” aimed chiefly at consumers. This is generally how Google had positioned the devices a year ago.

My thesis going in was that tablets have now taken that “second computer” market away — so unless they were really affordable consumers might not be interested in Chrome computers anymore. But yesterday’s quasi-launch event for the Chrome “notebook” — the term “netbook” didn’t make an appearance — surprised me in several ways and changed my mind about the outlook for the devices.

Perhaps the biggest surprise was the enterprise angle and emphasis, something that Google hadn’t really promoted in the past. But there were other surprises and interesting developments, including the announcement that Verizon connectivity would be built into the first devices from Acer and Samsung. Another intriguing thing was the way that the mobile market seems to have influenced the Chrome Web Apps Store.

When the Chrome OS was first discussed a year ago I was immediately taken back to the notion of the “network computer” pushed by Oracle CEO Larry Ellison in the 90s during the height of his war with Microsoft: a low-cost machine that was basically a terminal into the network. Google CEO Eric Schmidt made an appearance on stage yesterday to explicitly discuss the network PC and how Chrome OS machines were the realization of that vision.

He talked about why the idea had originally failed and why Google had now succeeded in bringing it to market. Google VP Sundar Pichai spent quite a bit of time talking about the enterprise benefits (cost, security, performance, centralized control) of Chrome OS machines.

Toward the end of the event Google showed a slide with a range of enterprise beta partners that will be deploying these machines to test them. American Airlines, Virgin Airlines, Kraft, the US Defense Department and others were among the enterprise testers. Partner Citrix was on stage demoing enterprise apps on Chrome as well.

I can well imagine that many enterprises could find these machines to be highly desirable for many of the reasons identified. After the event a Google PR person informally cited a Gartner figure arguing that total cost of ownership (TCO) for PCs in the enterprise (direct and indirect costs) was several thousand dollars annually. (Google declined to talk about pricing for the machines but it is probably going to be sub-$500). The idea here is that TCO can be radically reduced, while improving performance and security.

Chrome OS machines, in an unexpected way, now anchor Google’s overall enterprise strategy, which includes Google Apps (extending to third party apps through the Chrome Store and Apps Marketplace). The vision is thousands of low-cost boxes in the enterprise running Chrome OS, accessing enterprise data and apps in the cloud, where everything centrally updated and controlled.

I’m no expert on enterprise issues but it struck me that Google could well become a formidable competitor to both Microsoft and Oracle in the enterprise in a few years. The potential success of ChromeBooks has obvious direct implications for Microsoft, even more than Android’s success.

I also found somewhat surprising and even paradoxical the idea that Chrome OS machines might equally meet the needs of kids/students and professionals in Fortune 500 companies. Typically enterprise machines are costlier and more powerful because of the applications and software they have to run. In Google’s vision the Chrome OS box is a kind of one-size fits all machine because the web does all the work. Cloud-based software is where customization takes place.

Speaking of which I was struck by how the Chrome Web Store and perhaps the future of PC software more broadly were being influenced by mobile applications.

Various partners appeared on stage to show off their Chrome Apps: the NY Times, EA, Amazon. They looked to me exactly like iPad apps.

Built entirely in HTML5 they weren’t exactly websites but they weren’t client software either — because of course nothing will be downloaded on the Chrome OS machines. These apps on a Chrome notebook seemed to be a true marriage of mobile apps and the PC web. And as with mobile apps many will be paid. While the NY Times will probably have trouble getting people to pay for access to its conventional website, it may be in a better position to get people to pay or subscribe to its iPad, mobile and now Chrome apps.

Finally Google’s inclusion of a flexible pay-as-you go internet option from Verizon was a surprise. This is one of the fruits of the many faceted Google-Verizon alliance. It helps address the problem that a computer without desktop software needs a persistent internet connection or is useless. Google is also working on making apps work offline (the original idea behind Google Gears). Google demo’d this with Google Docs at the event.

After sitting through the two-plus hours of discussion, partners and demos I have a new opinion about the viability of Chrome OS notebooks, especially in the enterprise. And Google is no longer meekly referring them as “second computers” but rather arguing that they’re a good choice as a primary computer.

Cost remains an unknown and Google couldn’t or wouldn’t answer those questions yesterday, deferring to hardware partners not in attendance. However for consumers, as well as enterprises, that will be a key consideration.

Consumers will be less interested in the technical merits of Chrome speed and performance. First and foremost pricing will get their attention. And because fully outfitted laptops now come in routinely at $500 or below these machines will need to be aggressively priced if Google hopes to move those units, which will now be out in mid-2011.

Google has had enormous and even unforeseen success with Android, which in some ways is the model for Chrome OS. And if it can even perform half as well as its mobile sibling Google will have another hit on its hands.