Google Chromebook: Business Model By Ideology

CEOs must assiduously guard against ideology. They should avoid choosing a path for their business based on a rigid worldview. Ideology has killed many great industries, from railroads to word processors to fax machines. It interferes with logical, market-sensitive thinking, leading CEOs to ignore, and ultimately offend, their customers.

Google's announcement of its Chromebook constitutes a real-time case study. Chromebook hinges on the idea that we no longer need local storage or applications on our computers -- that the Web can handle most tasks.

Without the Web, Google's business model fails. Every time we search, Google gets a chance to make money based on advertising. That's why the company wants us to ditch our powerful laptops and trade them in for Web-centric workstations that won't work unless they are linked to Google's servers.

There's only one problem. While networks get cheaper and faster every year, processors and storage devices improve at even faster rates. That's why the iPad 2 has the power of a 1990s-era supercomputer. This means that the dominant future architecture will leverage powerful local devices and services available in the Internet cloud. Forrester calls this App Internet, and we believe that it will push the Web (and Google's current advertising model) into the background. 

CEOs sometimes hope that the world will stop spinning -- that their dominant market positions and ideology will last forever. That's the prayer Bill Gates would incant in the middle of the night back in 1994 when his technology monopoly was unchallenged. J.P. Morgan would chant the mantra in 1902 when his financial empire was at its zenith. But business strategies are not composed from wishful thinking or doctrinaire ideology. What Google hopes will happen, will not make it happen.

Comments

Saying that Chromebook will

Saying that Chromebook will fail without Internet, is much like saying Your phone will be useless without the network.

Yes, it will fail without the internet ... but don't you think that in the enterprise environment, internet connectivity is one of the essential components of the infrastructure?

2-3 years down the line, internet connectivity would be as much available as the mobile phone network. Hence I still see a solid chance of Google Chromebook making a huge market for itself.

The Web and the Internet

Now, I am saying that Google's business model fails without the Web, not the Internet. The Internet is a network, the Web is the software that we all use to exchange information on that network. It is my belief that the Internet is alive and well, but that the software we use (the Web) will be replaced by App Internet and other software models. And when that happens, Google's business model will suffer.

George

Neither Internet only nor App Internet is the end

I agree partly on what you say.
I think Google has it all wrong.
But I also seriously doubt app internet as the be all end all of internet either.

Here's why.
The PC & the internet are generative systems: systems which are anarchic in its original form - you have the ability to build on it what you want.
Because of this the original use is often ditched for something that no one thought of before, but which in the end seems to make sense (hindsight always being 20-20 vision)
With App internet & SAAS (let's call it cloud computing) you are always dependent on OS's or wether the App builder opens up it's software - thus you can nearly always ONLY use the thing as intended.
Look for instance at twitter - it started out very generative with a whole ecosystem being built around it.... and now... they are closing it off - making it less generative. why? because generativity makes something harder to make $
And as to what the costs of things are... and if theystay the way YOU want... who will say which programs you will have to pay what for in the future..... isn't having something on your computer that you use all of the time (instead of renting it as you do with App internet or SAAS - because they can ALWAYS change the thing you have bought into with a flick of a button)
And then there are the ISP's who now are starting to show their real face with Net Nutrality... or better said - the lack thereof (see the example of the Dutch Telco KPN - and following that the confession of Vodaphone last week)

I seriously doubt that with all of this turmoil about clouds and access if we really want to truly 'own' nothing....

P.s. of course it is ludicrous to rent a computer from Google which in the course of 4 years costs as much as an MacBook which then is not updates technically (inside the computer). For that money it is ALWAYS better to get a MacBook.... I don't understand where Google thought that we would be as happy to buy a samsung laptop for the same amount - but without the styling.

P.p.s. for a more in-depth reasoning - please read the future of the internet by Jonothan Zittrain

error

I wrote: "With App internet & SAAS (let's call it cloud computing) you are always dependent on OS's or wether the App builder opens up it's software - thus you can nearly always ONLY use the thing as intended."

But meant "With App internet & SAAS (let's call it cloud computing) you are always dependent on wether the App builder opens up it's software - thus you can nearly always ONLY use the thing as intended."

Apps and browsers are kissing

Apps and browsers are kissing cousins. Technically, you can view a device platform (ipad) as the browser for an app. Choosing local or network based resources is a developer decision not a corporate position.

We now have a hybrid landscape of web and device based apps. The Chromebook focuses on an important market segment. It's not a peek of the future but a reflection of today. Google is really good at solving today's problems - not so much at inventing tomorrows technology (think Apple).

Google has golden engineering street cred, with flocks of developers to help steer the ship. Captains should heed their voices and innovations to inform course corrections. It seems Google does this very well.

Great topic, thanks for sharing your thoughts on it.

Cheers,
Michael

The Local Computational Power Is There

Maybe we no longer need local storage or computational power, but they are there, and they are a very good option to improve the apps performance.

I am a developer and I have already done many professional apps that run even without internet connections. My customers notice the difference between a pure web application and the one which run locally (Internet apps ). They run faster and with a much more efficient interface.

I think the only problem with the local machines was the Microsoft monopoly, but it is in the past.

What about Windows/Enterprise apps?

If you are considering Chromebooks but don't want to leave your Windows apps behind, you should look at Ericom AccessNow, a pure HTML5 RDP client that enables Chromebook users to connect to any RDP host, including Terminal Server (RDS Session Host), physical desktops or VDI virtual desktops – and run their applications and desktops in a browser.

Ericom‘s AccessNow does not require Java, Flash, Silverlight, ActiveX, or any other underlying technology to be installed on end-user devices – an HTML5 browser is all that is required.

For more info, and to download the beta, visit:
http://www.ericom.com/html5_rdp_client.asp?URL_ID=708