Thinking About Windows 10, Chromebook, and the Education Market (Premium)

As I noted back in May, Microsoft cannot afford to lose the education market: This is where future generations of potential customers get their formal introductions to computers and software, in particular productivity software. And that experience will shape their expectations later in life, both in higher education and in the workforce.

But Microsoft is losing the education market, at least in the U.S.: This year, more than half U.S. primary- and secondary-school students—or over 30 million students—use Chromebooks and Google’s cloud-based productivity services. Meaning that the rest of the market is split between Windows, Mac, and iPad.

Despite the well-understood money troubles in education, this is a lucrative business, with Google earning $30 per Chromebook per year for its management services. But this isn’t really about direct revenues, per se: As noted, the battle for education is a battle for the future. And students entering the workforce will expect to use what they’re familiar with: Chromebooks and Google services.

These forces are very real. IT may want to lock down their environments, but they’ve succumbed to trends in the past 10 years that are driven exclusively by employee expectations. BYOD (bring your own device) and the proliferation of consumer-oriented devices like the iPhone are just two obvious examples. The days of super-gluing USB ports shut so that employees cannot connect their iPods is a thing of the past.

The success of Chromebook and Google services isn’t limited to the United States, either: While I still routinely hear from readers who are incredulous about this success because they never see these devices out in the wild, a revolution is happening all around them nonetheless. And with the PC market overall still sliding downward, or in the best-case scenarios remaining basically flat, Chromebook sales are exploding. It’s the only part of the PC market that has consistently delivered double digit growth in 2017. And Europe, Australia, and New Zealand are next on the list.

Naturally, Microsoft is fighting back.

Throughout this year, the software giant has touted various initiatives aimed at winning the hearts and minds of education customers. Most recently, it announced some successes, too: It says that it is seeing “strong growth” of Windows PCs in education, in the United States and elsewhere.

So what does that mean?

Well. It means cherry-picking data, of course, and ignoring long-term trends.

“In K-12 schools in the US in the last year, Windows device share grew 4.3 percent on devices under $300 and 8.2 percent on devices over $300, as more and more schools are choosing Windows over competitive offerings,” Microsoft’s Yusuf Mehdi explained this week.”

This data comes from a Futuresource quarterly report that examines the sale of mobile PCs in U.S. K-12 education. This report doesn’t appear to be sponsored by Microsoft in way, which is good. But it also doesn’t necessarily paint an overly-rosy picture for Windows in education either. Unless you just look at the one quarter.

According to the report, sale of mobile PCs in education are maturing, meaning that growth is slowing and that most sales moving forward will be for replacement devices. And most replacements will be, well, replacements: If you’re using Chromebook, you’ll most likely get a new Chromebook, since customer satisfaction with these devices in education is extremely high.

The report addresses initiatives from both Apple and Microsoft to combat the rapid rise of Chromebooks and Google services.

“Google remains the dominant market leader [but] its growth shows signs of slowing,” the report notes. Right. That’s what happens when you’re the market leader. It’s easier to grow quickly when you’re smaller.

“Apple launched its new (lower cost) iPad in Q2, which had an immediate impact with extremely strong sales,” the report continues. “Q3 saw the slowest Chromebook growth yet, with volumes only growing 3% year-on-year and there are signs that Microsoft’s momentum is building again, with Windows devices gaining share in Q3.”

Here’s my take on this: In the wake of major product releases, both Apple and Microsoft saw a bump. But the question is whether this is one-time bump or actual momentum. We shall see. Which is pretty much Futuresource says, too.

“The challenge now for Microsoft will be how to accelerate this trend in 2018,” Futuresource’s Mike Fisher notes. “The majority of market demand is expected to be replacement demand; convincing existing Chrome users to completely change the existing ecosystem will likely not be easy due to the time and cost involved.”

The good news for Microsoft is that Chromebook is only now starting to make inroads outside of North America, so Windows is still in the lead internationally: 90 percent of Chromebook sales to education “remain in the U.S.,” according to Futuresource. But “Chromebook international sales are steadily increasing in certain territories. In Northern Europe especially, Chromebooks have been consistently gaining share.”

Put simply, I realize why Microsoft has pulled some data out of this report to promote the notion of a Windows resurgence in education. But there’s no hard data to suggest that Chromebook is going to suddenly rollover and fade. In fact, I expect Chromebook to continue to grow in education overall, largely at the expense of Windows.

Microsoft is also correct to point out some important advantages of Windows over Chromebook, advantages that mirror the situation in the broader consumer market. And it has Minecraft, of course.

But Chromebook has advantages too. And in keeping with the conversation we had just this week about Windows 10 on ARM, it will be interesting to see what customers actually choose because that will indicate what is more important to them. And I think Google can make a great case for the simplicity, reliability, manageability, security, and low cost of Chromebooks.

It’s going to be a war. A war that will shape the future of personal computing and productivity. And despite this week’s cheery news, it is not clear at all which platform will come out ahead.