Can Google Inc.'s Chromebook Pixel Challenge Apple Inc.s New MacBook?

By Markets Fool.com

Google recently unveiled its second generation Chromebook Pixel. Unlike most Chromebooks, which cost less than $250, the Pixel takes aim at the high-end market. The entry level version will cost $999, the same as Apple's 13" MacBook Air, while the high-end one will bear the same $1,299 price tag as the new MacBook.

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The new Chromebook Pixel. Source: Google.

Will the new Pixel catapult Chromebooks into the high-end market, or is Google's approach deeply flawed?

Taking aim at the new MacBook
In terms of raw horsepower, a top-tier Chromebook Pixel easily tops the new MacBook or a mid-tier Microsoft Surface Pro 3, which also costs $1,299.

Weight

CPU

RAM

Storage

Display

Chromebook Pixel

3.3 lbs.

2.6 GHz dual-core Intel Core i7

16GB

64GB

12.85", 25601700

MacBook

2.03 lbs.

Intel Core M 1.1Ghz Dual-core

8GB

256GB

12", 2304x1440

Surface Pro 3

1.76lbs.*

Intel i5 1.9Ghz Dual-core

8GB

256GB

12", 2160x4440

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Source: Company websites. *Type cover weight not included.

However, the Pixel is heavier and has less storage space, as it relies more on Google's cloud-based apps than locally installed software. In terms of design, the Pixel has a MacBook-like aluminum chassis. In contrast to the new MacBook -- which only has a single USB Type-C port for charging, data transfer, and display functions -- Google packs in two Type-C ports with two standard Type-A ports.

As powerful as that hardware is, the Pixel is still a Chromebook, which means that it can't run Windows or OS X software. In January, Google declared that it will make it easier for consumers to install Windows on Chromebooks, but becoming an unofficial Windows OEM is probably the last thing Google wants to do.

The odd business of high-end Chromebooks
In my opinion, Google launched the Pixel for two reasons.

First, Chrome OS is often regarded as the "poor man's version" of Windows or OS X. Therefore, a powerful, high-end device showcasing Chrome OS could improve that perception. Like Microsoft's Surface, the Pixel could serve as a reference design to encourage top OEMs to develop higher end devices. That would encourage developers to create richer and more hardware-intensive apps for Chrome OS.

Second, the Chromebook market is notably smaller than the "ultramobile premium" market, which consists of high-end devices like the Surface Pro and MacBook Air. Gartner estimates that 5.2 million Chromebooks were shipped worldwide last year, compared to 39 million shipments of ultramobile premium devices.

Gartner expects Chromebook shipments to reach 14.2 million units by 2017, while ultramobile premium shipments are expected to hit 85 million by 2016. Therefore it makes sense for Google to tap into rising demand for those high-end devices.

Why Google's approach won't work
Unfortunately, Google ignores one crucial thing: Chromebooks are so popular because they're cheap. That makes them great devices for students and young professionals, which feeds into the company's Google for Education and Chromebooks for Work initiatives. Cheap Chromebooks also forced Microsoft to reduce its Windows license fees to help struggling OEMs launch comparably priced machines.

Google's Chromebooks for Education. Source: Google.

Since leading Chromebook OEMs like Samsung and Acer are already selling plenty of cheap Chromebooks, there's no real incentive to follow Pixel's lead into the high-end market. Therefore, Chrome OS apps will continue to be developed for the cheapest and most popular devices, since apps optimized for the Pixel would merely reach a sliver of the Chromebook market.

The key takeaways
Google's new Pixel isn't intended to go toe-to-toe against the new MacBook or the Surface Pro. Instead, it's an attempt to pull Chromebook OEMs out of the low-end market. If it can do so, Chrome OS might eventually be considered the equivalent of Windows or OS X.

However, there simply aren't many compelling reasons to own a $999 Chromebook, since Chromebooks that cost a fraction of that price can run the exact same apps. It's an impressive showcase device, but beyond a niche group of Chrome enthusiasts, it's unlikely to gain much ground in the ultramobile premium market.

The article Can Google Inc.'s Chromebook Pixel Challenge Apple Inc.s New MacBook? originally appeared on Fool.com.

Leo Sun owns shares of Apple. The Motley Fool recommends Apple, Gartner, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.