What will make Google Chrome attractive to consumers? Price.
Google’s Chrome operating system, which lands on netbooks next year, aims to usher in a new era of cloud-based living for consumers, pulling all their data and applications off their laptops and into the network. But the mixed reviews that met its demonstration last week beg the question: Is Google’s offering good enough to convince people to make such a fundamental change? I think Google will lure people to cloud-based living the same way it usually sells people on its services: by making the price irresistible.
Look at what Google is offering folks with Chrome versus what it asks them to tolerate. In the near term at least, Chrome OS will tie users to Google’s browser and to specific hardware. More importantly, it will make users much more dependent on network connectivity. When your Wi-Fi is weak, everything else will be too. (Google’s Gears technology, which enables limited offline work, could theoretically help address that issue but not completely remedy it.)
In exchange, Chrome offers automatic updates, fast boot-up times and security features, including the fact that, because apps are run in the cloud, the whole experience is virus-free. But none of those are likely to make a sale, let alone kick off a paradigm shift. Boot-up times of just a few seconds are neat but not that important. And while absolute virus protection is appealing, it’s marred somewhat by the security concerns that will come with cloud-based storage anyway.
Fairly or not, highly publicized outages from Web-based services (including Gmail) and recent security lapses among even facilities-based carriers like T-Mobile UK will make it hard for users to hand over all their digital possessions. Google plans to address those fears by letting consumers back up their data on portable storage devices that it hasn’t described yet, but that could also undermine its core message; what good is having everything in the cloud if I am constantly syncing files with my own local storage?
When you search the list of Chrome’s benefits for one compelling enough to convince users to make the leap to cloud-based living, the only one that really stands out is price. Because Chrome is free, hardware manufacturers are spared the typical licensing fees. But that’s not the only thing that could bring down the price.
Google is in a unique position to set the price at whatever point will lure consumers to its new model. After all, the company makes money almost anytime someone uses the web. So when it offers free Wi-Fi in dozens of airports over the holidays to promote its Chrome browser, as it’s doing this year, it’s not just eating that cost as a marketing expense; it’s monetizing most of those eyeballs through ad revenue. Similar math could justify netbooks at prices drastically cheaper than today’s, especially if Google leverages the closer relationship it would have with these netbook users.
To begin with, the committed use of Google’s hardware, OS, browser and apps could give Google much more information about these netbook users than it has about anyone else, enabling more lucrative targeted advertising. Google could also sell subscriptions to premium services crafted for the unique needs of the thin-client user. For example, Google could sell a subscription-based storage protection guarantee in an insurance-type model. Users pay a few dollars a month, and in exchange, if anything happens to their data, Google pays up big. That could undermine the message that regular clouds are secure, but it may help dispel a crucial customer concern.
Google isn’t saying how much netbooks operating Chrome OS will cost, but CEO Eric Schmidt has hinted around some of the possibilities. “The iPhone has proven that you can sell a phone with a subscription,” he said in October. “The contract cost is greater than the cost of the phone. So…does the hardware become free?”
The answer to that last question will determine much more about the success of Google’s grand OS experiment than the features it demonstrated last week.