Google, Microsoft Battle Drives Down Prices for PCs, Tablets

SAN FRANCISCO (AP) -

Google is releasing its cheapest Chromebook laptops yet, two versions priced at $149 aimed at undercutting Microsoft’s Windows franchise and gaining ground in even more classrooms.

Various PC manufacturers have been working with Google to design lightweight laptops running on the Chrome operating system since 2011. The newest versions are made by Hisense and Haier. Their arrival coincides with Microsoft’s rollout of a lower-priced Surface tablet in an effort to reach students and budget-conscious families. Pre-orders for that device began Tuesday, too.

As the prices for tablets and smartphones have been declining, it has forced on PC makers to lower their prices, said International Data Corp. analyst Jay Chou. The success of the Chromebook line is intensifying the PC pricing pressure.

“It has been good news for consumers, but not so good for vendors,” Chou said.

The cheaper version of the Surface Pro 3 sells for $499, compared with $799 to $1,949 for the higher-end models. The discounted version has a slightly smaller screen, a slower processor, and less flexible kickstand.

The Chromebook has served a dual purpose for Google. Like the company’s Android software for mobile devices, the Chrome system is set up so users will automatically begin using Google’s search engine and other services. Google has used the Chromebooks as a prod to bring down the prices of all PCs, something the company wanted to do because it has more opportunities to show the digital ads that bring in most of its revenue when more people can afford to buy a connected device.

Said Caesar Sengupta, Google’s vice president of product management for Chromebooks, “If Microsoft is reacting to (Chromebook’s low prices), that’s fantastic. We love it.”

Unlike most computers, Chromebooks don’t have a hard drive. Instead, they function as terminals dependent on a connection to get most work done.

Besides the $149 laptops, Google also is attacking Microsoft on other fronts. Later this spring, Google and Asus are releasing a hybrid Chromebook that can use used as either a laptop or tablet with a 10-inch screen. Called the Chromebook Flip, it will sell for $249.