Microsoft Admits Google Pushing for Cheap Chromebooks Is Bad News for Windows

Microsoft reported a strong second quarter for FY19, but one of the areas were the company posted lower-than-anticipated revenue is the Windows division.

Windows OEM revenue declined no less than 5 percent during the quarter, holding back the More Personal Computing unit, whose increase was limited to 7 percent.

Speaking about the reasons Windows declined, Amy Hood, executive vice president and chief financial officer of Microsoft, pointed to the increased competition in the entry-level market.

“In Windows, the overall PC market was smaller than we expected primarily due to the timing of chip supply to our OEM partners which constrained an otherwise healthy PC ecosystem and negatively impacted both OEM Pro and Non-Pro revenue growth,” Hood said in a conference call with analysts.

“Windows OEM Pro revenue declined 2%, roughly in-line with the commercial PC market. OEM non-Pro revenue declined 11%, below the market with continued pressure in the entry level category.”

Google Chromebooks

And while Microsoft’s executive hasn’t mentioned Google directly, the search giant has become a more powerful rival exactly in this entry-level device category.

Google is pushing harder for Chromebooks, which are often available at lower prices and are becoming more popular choices, especially in the education market. Google bringing more affordable devices to the market means customers who are looking for such laptops are no longer forced to choose Windows.

On the other hand, Microsoft itself is trying to stay competitive in this market with its very own products available at a lower price. The Surface Go, which was launched last year, is Microsoft’s smallest and cheapest Surface model to date, being sold in the United States from $399.

Particularly aimed at the education market, the Surface Go brings the power of Windows 10 in a much more affordable package, though until now, it just looks like the avalanche of cheap Chromebooks could be just too much to take for the little Surface.

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