Piece Of The Puzzle : Chromebooks In The U.S. And The Rest Of The World

I just found a very interesting pair of reports by Puneet Sikka on Market Realist/Yahoo Finance.

  1. “Why Apple Devices are Losing Share to Chromebooks in Schools”
  2. “Microsoft Gained Presence in the International Education Market”

The former article describes how Chromebooks are now more than half of all devices sold to US Schools (3Q15). The latter one tells us that in the international market, Chromebooks only have a 3% market share. In particular, it tells us that Chromebooks have a tiny 1% share in Brazil, Mexico and India, all markets where cheap Google/Android phones are doing exceedingly well due to high price sensitivity.

In fact, if you look at the chart below, it clearly shows that Chromebook market share is much higher for developed countries than for emerging ones. Although one might presume that cheaper Chromebooks are more suited for low-income countries, the reality is that the inverse is true; low-income countries prefer Windows.

NewImage

The reason is clearly stated in the article;

The main issue with these countries is that they do not have the required broadband infrastructure to support the cloud-based storage requirements of Chromebooks.

We often only look at the flashy devices that we use, made by the most powerful tech companies in the world; Google, Microsoft and Apple. We often forget that to make these devices work, we need a lot of infrastructure. We also forget that WiFi can be very, very expensive when you want to deploy a network capable of handling hundreds of simultaneous connections. We forget the infrastructure because unless you have to dealt with it directly, it is invisible.

This is something to keep in mind.

  1. Google exists only because broadband Internet access is cheap. Its business model and its data collection relies on the infrastructure of vast network of Internet equipment that most people in developed countries now take for granted.
  2. Amazon exists only because of a highly developed and inexpensive network of deliveries to your doorstep. This was not common 30 years ago in Japan, and I assume, most other countries.
  3. Microsoft and Apple built their businesses before this infrastructure. They have business models that work without it.

One could ask the question; what infrastructure enables Uber? What recent changes have occurred to it? Or they could ask, what infrastructure enables self-driving cars? Then they should look at other countries to see if the infrastructure is there.

I strongly believe that to understand the underlying current flowing through technology and innovation, one has to understand the gradual changes of the infrastructure. The tech that we see are often just the rocks that are being pushed downstream. The Chromebook example is a strong reminder of what we should keep our eyes on.

  • Kenny

    Indeed Great post
    It remains true that those who hold the key to the underlying infrastructure have all the power to dictate the pace of the market, which may be the reason Google and Facebook are trying to developed their own communications infrastructure.

    • Thank you.

      Two things to add.

      First, as you say, I also believe that those who hold the keys to the infrastructure are very strong. The barriers to entry for infrastructure companies also tend to be quite high, due to capital costs, reliability and safety requirements, and in the case of telecommunications, the strict limitation on available radio frequencies. Many tech pundits underestimate the importance of the infrastructure companies, calling them simply “dumb pipes”. The fact is, these “dumb pipes” are very important and very profitable.

      Second, you mention Google and Facebook developing their own communications infrastructure. I also try to see what possibilities remain going the other way. That is, how can telecommunications companies shape the device, software and services industries. We have already seen how the subsidies, paid out by telecoms, have severely altered the device pricing structure in many countries. We have also historically seen DoCoMo, a carrier, develop and own the iMode platform, including the OS and basic hardware designs. As the device OEMs continue to struggle to make a profit, it seems obvious to me that they would turn to the carriers and beg for their pennies, unless Google or Facebook are more willing to help them out. In other words, I am predicting a “Return Of The Telecoms” for the mid-term.