During the Google I/O event, Google (GOOG) made its big announcement: it will bundle netbooks running its Chrome OS with software, support and replacement service for monthly fees to business and education users. Consumers will be able to buy what Google calls a Chromebook starting at $350 (as of June 15); meanwhile, business users can get the bundles for $28 per user per month, while those at schools and government institutions pay $20 per user per month.
Google has been poking at Microsoft (MSFT) for years, but this time, it's trying a full frontal assault on the computing market. It has a lot of interesting things to offer: lower cost, easier management, easy-to-deploy applications (with a growing app market), and snappy speed. However, there will be two hurdles that could trip Google's efforts: compatibility and customer service.
Have it your way
The biggest issue facing Google is that people and organizations rely on software they've already purchased, and none of that will work on a Chromebook. That means Google has to find ways to smooth the transition, at least for the corporate and institutional markets. The company stresses its software partners, but three of the ones it points to -- Box.net, Salesforce.com, and Zendesk.com -- are all Web-based, which is not how most large companies handle their IT infrastructure.
In addition, Chromebooks expect to store everything on the Web. That sounds fine if you don't remember Google's recent loss of customer data because of software problems. You could tell people to go with a private cloud, but, again, this is experimental for most organizations.
For applications that don't live on the Web, Google suggests desktop virtualization technology (running desktop applications from centralized servers instead of local hard drives) like that offered by Citrix (CTXS). That might make sense for many corporations, but now the adoption curve has become far bigger and more challenging, without any assurance that the virtualization systems will work with Chrome OS.
We'll get back to you on that
Google's recent problems with customer data or its ill-fated romp through the hardware vending waters with its Nexus One smartphone point out a glaring, long-term weakness in the company's approach to customer service. As in, it basically doesn't have one.
Even in Google's core search engine business, its customer satisfaction is hardly stunning, according to the American Customer Satisfaction Index from the University of Michigan Ross School of Buisness. Here are the results for Google (click to enlarge):
It's just a bit better than Microsoft (MSFT) Bing and, more importantly, the 2010 rank was down 7 percent from the previous year. And that's in an area where Google has existing strength. Now look at two other potential ways that Google will be judged: computer hardware and operating systems. The first graph is of Apple's customer satisfaction score, in the context of the computer hardware industry (click to enlarge):
Next, how do you compare Google with Microsoft as a software vendor? The ACSI never thoroughly broke out software companies, with Microsoft the only one mentioned by name (and Google classified as a search engine service). But, the rating for software and Microsoft both rated at 76. Interestingly, Microsoft was actually up 8.6 percent between 2009 and 2010. (My bet is that replacing Vista with Windows 7 had a lot to do with the improvement.)
Google's problem is that, in search, there is little to really go wrong. Oh, people may not find what they want, but chances are that they'll blame themselves and not the search engine for lacking what they want.
Meanwhile, back in the real world
Life is different when consumers pay for what you provide. Suddenly, things have to work, and if they don't, people want satisfaction. If they can't get it -- or even get hold of customer service -- then they want their money back.
You can tell that Google is sensitive to the problem of public perception just in how it uses terminology. Originally, the company talked of Chrome OS running on a netbook. But netbooks gained a bad reputation for poor customer satisfaction.
In today's announcement, Google referred to the devices as notebooks, not netbook, but they still run on Intel (INTC) Atom chips (even if dual core) and generally have light-enough specs to allow for 6 or 8 hours of battery life.
But changing names won't do a bit of good. The company would have to develop good customer service for Chrome-powered netbooks to work. That takes a lot more than Google has been able to show to date. Cheap is worth nothing if people aren't happy with what they bought. Customer satisfaction comes with service and communication, not with technology. And Google has been noticeably lacking in either.
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