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July 22, 2011

Google Makes Money from Chromebooks

While many people think there's a lot of overlap between Android and Chrome OS, the products don't have a lot in common. Chrome OS is a proprietary operating system based on an open-source project and OEMs can't tweak it or add new features. Just like for Nexus One and Nexus S, you get all of the updates from Google. Another difference is that Chrome OS is constantly updated and you can even switch to the beta or the dev channel to try the latest features. Chrome OS has an automatic update feature, so that Chromebooks run the latest version of the operating system.

Google's CFO, Patrick Pichette, mentioned another difference between Android and Chrome OS: "Google is making some money from companies buying computers that run the Chrome operating system." Google came up with an innovative subscription model for businesses and schools. Instead of paying for the hardware, organizations can pay $20-$33/device/month and get a notebook, enterprise support, new devices every 3 years or even more often, a Web-based central management console, integration with Google Apps. While enterprise Chromebooks are a lot more expensive than the regular Chromebooks available at Amazon or Best Buy, Google says that the total cost of ownership of a notebook can be reduced by up to 70%. "Chromebooks and the management console automate or eliminate many common, time-intensive IT tasks like machine image creation, application distribution, patching, and upgrades. Additionally, there is no need to purchase licenses for anti-virus, data encryption or data back-up software."

Like Android, Chrome OS also encourages people to use Google's services more often. "People search more when they use the Chrome browser or Android phones, which increases Google's core business," says Patrick Pichette. Android will also offer additional revenue opportunities. "Nonsearch revenue will eventually arrive for Android as it combines Google Maps, mobile payments with Google Wallet and daily deals with Google Offers."
When we have products that get resounding user and consumer success and that are growing in the hundreds of millions we don't worry. The only question is when and how will we monetize. Everybody's all nervous about the fact it's been 36 months since Android has launched and you only have search (revenue). That's the criticism I hear. The questions that are asked are so short-termish. That's just not the way that Google thinks.

For now, Chromebooks are the perfect Google Apps "thin clients", while Android devices have so many sensors that help you explore the world and make Web services a lot more useful when you are on the go.

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