Why the Chromebook Pixel is so darned expensive
We’d been hearing rumors about the Chromebook Pixel for at least a few weeks, up until its official unveiling yesterday. We knew it was going to be touch-enabled, we knew the screen would probably be really awesome, and I speculated that we’d probably see a nice bump in RAM and internal storage, too – none of that was very shocking. What was surprising to most people, however, was the cost: $1299 for the WiFi-only model, and $1449 for the LTE version.
Blogs and social media everywhere erupted suddenly with thousands of disgruntled comments, such as: “What the f*** was Google thinking?” “Why would I buy this when I can get a Macbook Pro for the same price?” “I’d rather get a Surface Pro, even if the Chromebook Pixel was the same price.” And, “Just who the hell does Google think it is?”
I can understand the frustration – I really can. I was hoping to get one of these myself, but as someone fresh out of graduate school, living on a very strict budget, this was priced firmly and uncompromisingly out of my reach, and out of many other people’s reaches, too. But once I finally got over the sticker shock, and began thinking about this a little more rationally, I began to see that, actually, the price does make sense. Let me explain.
It’s not Google’s goal to sell a lot of these.
Sundar Pichai, the senior vice president of engineering in charge of Google Chrome and Google Apps, recently stated point blank in an interview with CNET, “Our goal wasn’t to be too commercial with this.” Google isn’t marketing this notebook in the same way it’s pushing the new Samsung Chromebook, or the even cheaper Acer C7. Those devices are made with consumers in mind – they are priced just low enough – and have just enough computing power – that almost anyone can pick one up and use it as his or her everyday computer. That’s not what Google intends for the Chromebook Pixel.
According to Pichai, “Our goal is to get it in the hands of developers so they can build amazing applications. We wanted to give power users a way they can live on Chromebooks.” In other words, this is a machine built for developers, or for users who have been complaining about the lower specs of the current generation Chromebooks, for which money is really no object. (Those people exist, too!) These were built so that more people can push the limits of Chrome OS in ways the current generation of Chromebooks cannot – and hopefully, this will eventually improve the Chrome OS experience for everyone. This was built for those people with much more disposable income than me, who don’t mind throwing it down in order to be one of the exclusive few to have the fancy new flagship notebook from Google.
Google has to be considerate of its other manufacturing partners.
Pichai also stated in that same interview that Google intentionally priced the Chromebook Pixel in such a way that it is in an entirely different category than any of the other Chromebooks from Samsung, Acer, HP, or Lenovo that are on the market today. In part, this is because Google is still banking on the success of Chrome OS – it doesn’t want its manufacturing partners to feel threatened by competition from Google itself. By pricing the Chromebook Pixel the way it did, other manufacturers don’t have to worry about their own sales being negatively affected.
One might argue that this point is moot when you consider Google’s aggressive pricing of the LG Nexus 4 – doesn’t that threaten the smartphone sales of Samsung, HTC, and others? In response, I’d argue that the smartphone market is an entirely different beast: you can’t really compare smartphone sales (which are usually subsidized) to laptop sales (which usually never are).
You also have to consider that Android is arguably the most successful smartphone OS on the market right now, at least in terms of worldwide adoption – Google can therefore afford to be a little more risky with its Nexus line. Chrome OS, on the other hand, still has a lot of work to do if it wants to catch up to Microsoft and Apple in terms of overall popularity among the general population. Google has to be much more careful in regards to how it treats its Chrome OS partners.
This is perfect if you’re already paying for 1TB of Google Drive storage.
For Google Drive power users who actually shell out the $49.99/month for 1TB of Google Drive storage, the Chromebook Pixel makes perfect sense. In fact, you’d be stupid not to get it: anyone who purchases a Chromebook Pixel will automatically get 1TB of storage free for 3 years. By itself, this is a value of $1800. Think of it this way: if you’re already planning on getting that anyway, you can basically prepay for three years, and receive a discount of $500 and a free Chromebook Pixel. Or, if you’re already on this plan, Google is basically paying you $500 and giving you a free notebook.
Factor in the free in-flight WiFi, and you really come out ahead. And even if you pay extra for the LTE version, you still ultimately get a discount of $350.
Google doesn’t make money on hardware, no matter how it’s priced.
You also have to consider that Google’s main source of revenue is, and always will be, advertising. It doesn’t really make much money on hardware sales, regardless of how cheap (the ASUS Nexus 7) or how expensive (the Chromebook Pixel) they are. All of the hardware is ultimately just a portal to try to get you to use Google’s online services, buy stuff from the Play Store or the Web Store, and click on ads. That’s it.
Because of this, it doesn’t really matter how many of these Google sells. Google doesn’t really care if it’s not very successful. Much in the same way that the Surface is a model for Microsoft’s partners, and that the Nexus line is a model for Android’s partners, the Chromebook Pixel will be a model for Chrome OS partners. It will pave the way for future touchscreen Chromebooks, and maybe even a Chrome OS tablet. In other words, it will help Chrome OS mature – and as long as it does that, it will have done its job.