Microsoft Corporation (MSFT): Google Inc (GOOG)’s Chrome OS Could Destroy Windows

PC OEMs backing Chrome
Besides the aforementioned Samsung, other major PC OEMs, such as Hewlett-Packard Company (NYSE:HPQ) and Acer, have introduced Chromebooks, while Asus is planning to sell one later this year.

Asus’ CEO said that he believes Chrome OS could be popular among governments and educational institutions, as well as some business users. As demand for Windows PCs declines, Asus hopes its support of Chrome OS will offset that to some extent.

HP is banking on something similar. Last month, Hewlett-Packard Company (NYSE:HPQ) shares plunged after the company reported disappointing earnings. As one of the largest PC makers in the world, the decline of the Windows PC has hit Hewlett-Packard Company (NYSE:HPQ) especially hard. Sales of HP’s PCs fell a stunning 22% on a year-over-year basis.

HP CEO Meg Whitman has been talking up Google Inc (NASDAQ:GOOG)’s operating system. As Business Insider’s Julie Bort noted, Whitman has avoided mentioning Windows specifically, instead promising to a build a company based around “multiple operating systems.” Overall, HP’s relationship with Google Inc (NASDAQ:GOOG) has been intensifying — the two announced a partnership in June that has HP selling Google Inc (NASDAQ:GOOG)’s Apps alongside its own hardware.

Could Chrome OS supplant Windows?
Right now, it might sound like a stretch, but Google Inc (NASDAQ:GOOG)’s Chrome OS could supplant Windows as the dominant traditional PC operating system. Chrome OS excels in a number of ways, most notably price, but has major limitations.

Because it is more of a web browser than a traditional operating system, users of Chrome OS are limited in the software they can access. Yet, in just the last few months, the popularity of cloud-based software has exploded, and applications as complex as AutoCAD can be accessed with a Chromebook. Meanwhile, PC OEMs, such as HP, are looking to Chrome OS to help them offset the decline of their Windows business.

As a percentage of Microsoft, Windows is still substantial, generating about one-fifth of Microsoft’s revenue and one-sixth of its operating income. As mobile devices cannibalize PC sales, most observers might expect the Windows division to shrink further. But that’s putting it lightly. Should Chrome OS take off, Windows could fade into total irrelevancy.

The article Google’s Chrome OS Could Destroy Windows originally appeared on Fool.com is written by Sam Mattera.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google, and Salesforce.com. The Motley Fool owns shares of Amazon.com, Google, and Microsoft.

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