Could Subscription Hardware Be the Future or Just a Failed Google Experiment?
As part of Google’s I/O conference, today the company behind Android announced details regarding Chromebooks’ venture into the consumer market. Chromebook is an instantly accessible, Google-approved laptop that runs its web-based Chrome OS. Along with conventional one-time fee purchasing options, students and businesses can choose a $20-$28/month subscription plan. Notice how it’s a subscription, not financing; there are big differences.
As it is a subscription, quite a few services and benefits are offered: a complimentary 100MB of Verizon 3G usage per month, a never-ending warranty, free software/OS updates. There is also the proverbial cherry on top: a brand new system every three years.
While the average consumer cannot take advantage of this deal, students can sign on for $20 per month. Businesses are in a similar but more expensive boat at a rate of $28/month.
This could be truly profitable for Google and a cheap option for select individuals in the small picture, though three years is too long between system upgrades. Each system will end up costing between $720 and $1,008, plus you may not even be able to keep systems once they are replaced. Of course $20/month is a easy fee for many people to add especially compared to a more risky financing plan or a straight-out purchase. It would be much easier for students to take $20 out of their wages, plus businesses would be making a smaller investment.
It seems that the subscription hardware’s value at this rate is more in perception. $20/month does not sound bad, but you are not necessarily getting your money’s worth. That is, depending on how you look at the benefits of an option that presents less risks than financing or a loan.
Students and businesses are probably just the beginning for Google as long as this works out. Since in theory (barring any operating/damage/return costs), the current subscription model is more profitable than a one-time fee model.
Since Chromebook runs the crippled Chrome OS, which can only access the internet and run HTML/Flash apps, the caveat of its many inabilities puts it into a position to only be a secondary computer. For this reason alone, a subscription is a smart offering since customers do not have to make another multi-hundred/thousand dollar investment and question its necessity.
Chromebook will attempt to steal some of the iPad’s buyers who are looking for a cheap, but optimized experience and are not ready to take the jump to a next-generation control scheme. It may be too expensive to make a difference, but the subscription plan could spread to the rest of the industry. When most already have devices that can access the web among tons of other features, they need a lot of reasons and convincing to compel them to spend more money on another product with similar or less capabilities.
A risk-free, cheap subscription may be exactly what competing tablets and, dare I say, netbooks need to stay afloat in a market that the iPad dominates. Apple may never find subscription hardware to be an elegant, viable method of sale, but competitors are open to new ways to cut into the iPad’s market share, and this could be one.