Can Windows 8.1 devices close the door on Chromebooks?

A new generation of Windows PCs, with price points hovering around $300, is hitting the market with a vengeance this fall. Consumers stayed away from the last generation of high-priced touch notebooks. Will these new, cheaper devices turn the tide and reclaim the low-end market from Google's Chromebooks?
Written by Ed Bott, Senior Contributing Editor

The business of selling cheap PCs is brutal, with razor-thin margins and cutthroat competition.

For the past year or so, Google and its hardware partners have aggressively targeted this market with a handful of Chromebooks that typically sell for $299 or less. The #1 slot on Amazon’s best-selling laptops list, for example, has been occupied nonstop by Samsung’s $249 Chromebook for nearly a year.

Until this week, that is, when the new ASUS Transformer Book T100, running Windows 8.1, dislodged Samsung’s Chromebook from the top spot on that list.

What makes the T100 different from the previous crop of touch-enabled tablet/notebook hybrids? In a word, price. Those first-generation 2-in-1 devices were priced at a premium, typically in the $1000 range, which is too high for students and budget-conscious consumers to even consider.

The T100 is a full PC, with a 10.1-inch display that detaches from the keyboard to act as a tablet. It runs Windows 8.1 on a zippy new Atom Bay Trail Z3740 processor, has 64 GB of solid-state storage, and includes a copy of Office Home & Student 2013.

And its recommended retail price is $399, which means its street price is hovering around $350-380. That's close to the magic $300 number where PC sales are still growing.

Google has been promoting the Chromebook category heavily with TV ads and a marketing pitch that positions the devices as “a new type of computer with everything built in.” In the Laptops section at Walmart.com, traditionally the most budget-conscious of all online shopping destinations, the devices get prominent placement.


I stopped in at my local office superstore yesterday and saw the T100 prominently displayed for $350. Next to it was a new HP Pavilion 10 TouchSmart laptop, also equipped with a touchscreen, running Windows 8.1, and including Office Home & Student 2013, for $299.99.

That’s the magic price point that Windows PCs have to hit to begin reclaiming market share from extremely price-sensitive consumers.

There are more new Windows 8.1 devices in the sub-$300 category as well, including 8-inch tablets like the Dell Venue 8 Pro and Lenovo Miix 2 and the upcoming Toshiba Envoy.

These prices and device sizes are reminiscent of those that propelled the netbook category to success, briefly, a few years back. The trouble with netbooks is that they were sluggish and ultimately unsatisfying. The new generation of hardware, combined with Windows 8.1, means that these new devices start up in seconds and zip along on basic tasks, making them capable of doing everything a Chromebook can do, without sacrificing compatibility with conventional Windows desktop apps. There's still a price premium, but the gap has narrowed dramatically.

The latest research from NPD shows that touch-enabled notebooks struggled in the first half of 2013, selling 6.2 million units, equal to a 7 percent share of the overall notebook market. For the full year, NPD predicts that the market share of touch notebooks will rise to 11 percent and continue steadily climbing to reach nearly half of the notebook market by 2017.

I suspect those numbers may underestimate the growth in this category. There will, of course, continue to be a market for conventional business laptops, mostly running Windows 7. But touch capability is turning into a checklist item for new PCs. We won’t know until next year, when OEMs and analysts tally up their sales, whether the strategy was a success.

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