Alphabet Inc’s (NASDAQ:GOOG) dominance in its search engine business needs little introduction. But since everyone knows that, it might have already been priced into Google stock. Today, I’m going to talk about something a bit less known at Google that could become a huge catalyst one day.
This Could Be Huge for Google Stock
There is no denying that search is what Google is known for. I mean, the name actually became a verb meaning to search for something on the Internet. But the company is kind of tired of being only associated with its search engine. That’s one of the reasons why Google changed its name and formed an umbrella company called Alphabet. And while the giant conglomerate is placing “other bets” that look like moonshot projects, there are already quite a few things outside of search that are working for the company.
I’m looking at Google’s “Chromebook,” which is already a huge success. But it shouldn’t really come as a surprise. You see, not everyone needs a full-fledged PC or “Mac.” If you just want a device to browse the Internet, watch Netflix, answer your e-mails, and perform some basic word-processing tasks, Google Chromebook could offer you much better value compared to products from many other companies.
The most important feature of a Chromebook is its operating system—Google’s “Chrome OS.” Every Chromebook ships with this operating system, which uses the Linux kernel and the “Google Chrome” web browser with an integrated media player. The device is intended to be used primarily while connected to the Internet, with most of its applications and data live in the cloud. The company’s hardware partners include industry heavyweights like Dell, Acer, and Samsung.
Chromebooks have captured a niche in the market. For users who don’t need to run complicated applications on their computers, Chromebook’s below $300.00 starting price makes it an appealing choice. Moreover, thorough Chromebook, Google has found a unique audience—schools.
While sales of personal computers haven’t been that great in recent years, the education market could be the next big opportunity. And Google is taking the lead right now.
According to Futuresource Consulting’s latest “EdTech K–12 Market Report,” Google has taken a significant amount of market share from Microsoft Corporation (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL). In the third quarter of 2015, Chromebooks reached 50% of sales for the first time in the U.S. K–12 market. (Source: “Microsoft Expected to Fight Back in Global K-12 Market in 2016,” Futuresource Consulting, December 4, 2015.)
“The combination of the simple to use ecosystem, attractive hardware price point and industry leading management platform has resulted in Chromebooks gaining widespread momentum in the US market,” reads the report.
Some might say that since most of the applications are live in the cloud, Chromebooks would have serious security risks. But the Chrome OS might be harder to hack than you think. You see, Google was offering a $50,000 reward to anyone who can hack into a Chromebook in guest mode, but hasn’t received a single successful submission. Now, the company has doubled the bounty to $100,000. (Source: “Get Rich or Hack Tryin’,” Google Security Blog, March 14, 2016.)
The Bottom Line on Google Stock
At the end of the day, let’s not forget that Chromebook is not the only lesser-known product that turned out to be great at Google. For instance, the company has managed to enter people’s living rooms with its video-streaming device called “Chromecast.” In 2014, Chromecast was the top-selling streaming device in the U.S. (Source: “Google Q4 2014 Results – Earnings Call Transcript,” Seeking Alpha, January 29, 2015.)
The bottom line: other than its core search business and distant moonshot projects, Google stock still has a lot going for it.