Google Inc.'s plan to build a computer operating system confirms what Chief Executive Eric Schmidt has downplayed for years: The Internet giant is challenging Microsoft Corp. in virtually all its businesses.
The operating system, dubbed Google Chrome OS and announced late Tuesday, is designed to ouflank a giant: Microsoft's Windows, which already runs the vast majority of the world's personal computers. Google now offers rival products in many of Microsoft's major businesses, except for videogame machines and heavy-duty commercial software.
Critics say it's a risky strategy, with 70 % of current applications requiring Microsoft Windows, according to Gatrner analysts. However, this view is based on the marketplace today, instead of where the marketplace is already headed, toward greater use of web-centric devices.
And, while it could prove to be a distraction from Google's main business, selling ads online. Google's revenue growth has slowed dramatically in recent years, so it is may be placing a big bet that its future growth will come from offering online software.
Chrome OS is also trying to redefine the idea of what a computer operating system should be. In a blog post Tuesday night, Google said the operating system would have the ability to boot up and let users get online in just seconds and new security features, addressing sore points for some users of PCs that run Microsoft Windows. Google is also betting customers will gravitate toward online software that requires an Internet connection, as opposed to conventional PC programs that are downloaded and installed.
Mr. Schmidt, a veteran of Sun Microsystems Inc. and Novell Inc., fought bruising battles in the 1990s as the two companies couldn't match Microsoft's advantages in marketing Windows.
In an interview Wednesday, Mr. Schmidt said he isn't obsessed with competing with Microsoft, and that the company's strategy is to create new markets for online applications. "This is about opening up a whole new area," he said. "Google is not about doing the same thing that everyone else has done," he said. He also said it is natural for Google to think about competing with Microsoft but that doing so takes up "very little" of his time. Microsoft declined to comment about the new Google software. But some people familiar with the matter have said Mr. Schmidt has tried to dent Microsoft's business throughout his tenure at Google.
From roughly 2003 to 2005, Mr. Schmidt convened regular secret meetings of a small group of executives to discuss how to best compete with Microsoft in specific product areas, an effort code-named "Canada," according to people familiar with the meetings. He was quick to try to foil Microsoft's plans to acquire Yahoo Inc. last year, calling then-Yahoo CEO Jerry Yang to offer help fending off Microsoft's hostile takeover attempt, say other people familiar with the matter.
Google's focus on Microsoft partly grew out of longstanding concerns that it would undermine Google's business by making it tough for Google to offer a search toolbar on the Internet Explorer Web browser, according to several former employees.
Google's work on a Web browser and operating system dates back many years, according to people briefed on the projects. Google co-founder Larry Page has long wanted to release a Web browser and accompanying software, say these people, in order to build faster and more powerful Web-based technology. But Mr. Schmidt held him back, arguing that Google ought to continue to focus on search and search advertising for now and wait to strike later, these people said.
In September 2008, Google introduced its own browser, similarly named Chrome, to compete with Microsoft's market-leading Internet Explorer. Now, Google is essentially building its new operating-system software around its Chrome browser, supported by core programming code from the Linux operating system.
The approach, Google engineers argue, means that any application designed to run with a standard Web browser will automatically run on Chrome OS as well as on other major browsers and operating systems. The advantage is that Google instantly will start with a built-in base of programmers.
Chrome OS is being designed to run both on machines powered by the PC chips popularized by Intel Corp. and Advanced Micro Devices Inc. as well as designs licensed by ARM Holdings PLC that are normally used in cellphones.
ARM chips are trying to push into the market for low-cost netbook computers. ARM-based machines could be considerably less expensive and offer longer battery life, says Ramesh Iyer, head of world-wide business development for mobile computing at Texas Instruments Inc., an ARM backer that is working with Google on the operating system.
More broadly, Chrome OS could add to the forces lined up against the so-called "Wintel" juggernaut -- the slang term for the technology standard based on Microsoft's Windows software and Intel's chips that created a massive industry. Some observers also see Google Chrome helping to accelerate a shift in the PC industry to become more like the cellphone industry, with hardware and software largely subsidized by carriers charging monthly service fees. Some netbooks are already being offered this way.
"Obviously the loser in this is people in the PC industry who think high-priced hardware and high-priced software are the future," said Jim Zemlin, executive director of the Linux Foundation, a nonprofit group that helps oversee the evolution of free or low-cost Linux-based operating systems.
Intel has also been promoting a variant of Linux called Moblin for use in netbooks and other products. Intel says it was aware of Google's Chrome OS. "We applaud Google's move here," an Intel spokesman said in prepared remarks. "More choice in this area will benefit the industry and likely speed innovation."
Google's approach comes with special obstacles. For one thing, Web-based based software usually runs on a remote server, not on the user's local PC; therefore, a netbook running Chrome OS isn't likely to be able to do much when it is not connected to the Internet, says Al Gillen, an analyst at IDC. Though many applications will eventually migrate online, some parts of the world don't have wireless broadband connections to support this kind of software.
Google's Chrome browser, meanwhile, hasn't become a big hit. It had less than 2% market share in May, according to Net Applications, a market-research firm, compared to 65.5% for Microsoft's Internet Explorer and 22.5% for the Mozilla Foundation's Firefox browser.
The concept of using a Web browser for software development was debated in the 1990s, during the fight involving browser pioneer Netscape Communications that led the Justice Department to bring a high-profile antitrust case against Microsoft. Microsoft executives competed aggressively against Netscape browsers, which they viewed as a major threat to weaken Windows' influence over software developers.
The Chrome OS appears tightly linked to the Chrome Web browser, but Chrome's market share is tiny, and there's no clear link between areas where Google could be considered dominant -- search and online advertising -- and the new operating system.
edited from WSJ - 07/09/09
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