Google launching new Chromebooks

May 29, 2012: 7:00 PM ET

The company's fledgling hardware initiative is getting a second boost.

GoogleFORTUNE -- About a year after announcing its first Chromebooks, Google is launching updated versions of the barebones computer -- a new laptop and desktop, both made by Samsung. The question is, will customers want to buy the devices, even with a few added enhancements?

Google (GOOG) hasn't released any unit sales numbers, but the company says over 500 schools have now deployed Chromebooks. Then again, the Chrome OS-running laptops haven't exactly caught on with big business. Despite the move to the cloud, enterprise customers still need fully functioning business applications like Microsoft's (MSFT) Office suite. Chromebooks, however, are only useful for web-based apps like Google's own docs and spreadsheet tools, or email. For the vast majority of corporate users, that limited, web-centric functionality just doesn't cut it.

"Chrome OS computers are for workers who mainly use email and software-as-a-service applications that are accessed in a web browser," says Frank Gillett, an analyst with Forrester Research. "They're not for anyone who needs full Microsoft Office capabilities, who is often off the network, has large files or large quantities of files, and who travels a lot away from WiFi."

The new Chromebooks do offer several new features. Users will finally be able to view Office files, both online and offline, though they still can't do any editing. The devices will also come with Google Drive built in, and the ability to edit Google Docs offline will roll out in the coming weeks (to all Docs users, not just Chromebooks owners). Google says the updated Chromebooks will also be 3.5 times faster than their predecessors, with an improved boot time of 7 seconds.

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"Chrome [OS] keeps getting better over time," says Caesar Sengupta, product management director for the Chrome operating system. "We're very happy with progress over the last year but this is a big effort and a long-term commitment. We have to be invested in this for many years."

In some ways, Chromebooks are probably ahead of their time. Chrome OS is still a work in progress, and enterprise customers are still dependent on traditional software, whether Google likes it or not. What's more, the fledgling laptops have a growing roster of competitors to contend with—not just Apple's (AAPL) iPad and MacBook Air but also so-called Ultrabooks, a category of uber-thing laptops pushed by Intel (INTC). None of these gadgets are cheap, but Ultrabooks are expected to sell for slightly less than $700 by end of this year. More importantly, they're a fully-functioning laptop. The new Chromebooks, meanwhile, will sell for $449 a pop. The desktop version will retail at $329. Like Ultrabooks, Chromebooks are based on Intel processors, and it would make sense for Google to get hardware makers to manufacture Chrome OS-running versions of Ultrabooks (Sengupta says he will neither confirm nor deny that such talks are in the works).

"Chrome OS is a very important and strategic effort for us," says Sengupta. "It's the direction we've been going with apps and Chrome. It's a new kind of computing system that's simple and is super fast."

For now, Google can probably afford to keep its Chromebooks project running regardless of how many computers actually get sold. The company says more manufacturers will unveil Chromebooks by end of this year, and that the updated computers will sell in retail locations like Best Buy (up until now Chromebooks were only available online). In the meantime, it's likely Chromebooks will continue to gain traction with forward-thinking educational institutions and maybe other price-sensitive organizations like the non-profit sector. But don't expect these latest features to have a profound effect on enterprise sales--that may be years away. Or it may never happen. Lucky for Google, it's also got Android.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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