Google OS to challenge Microsoft's turf

Search powerhouse plans to launch system for netbooks in 2010 before moving to desktops.

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SUN VALLEY, Idaho (Reuters) -- Google Inc. is declaring war on Microsoft Corp. by seeking to unseat the software giant's globally dominant Windows operating system for personal computers.

Google (GOOG, Fortune 500), which already offers a suite of e-mail, Web and other software products that compete with Microsoft (MSFT, Fortune 500), said late Tuesday it would launch a new operating system for computers ranging from ultra-compact netbooks to full-size desktop PCs.

Called the Google Chrome Operating System, the new software will be in netbooks for consumers in the second half of 2010, Google said in a blog post, adding that it was working with multiple manufacturers.

"It's been part of their culture to go after and remove Microsoft as a major holder of technology, and this is part of their strategy to do it," said Rob Enderle, principal analyst at Enderle Group. "This could be very disruptive. If they can execute, Microsoft is vulnerable to an attack like this, and they know it," he said.

Google and Microsoft have often locked horns over the years in a variety of markets, from Internet search to mobile software. It remains to be seen if Google can take market share away from Microsoft on its home turf, with Windows currently installed in more than 90% of the world's PCs.

Key to success will be whether Google can lock in partnerships with PC makers, such as Hewlett-Packard Co. (HPQ, Fortune 500) and Dell Inc. (DELL, Fortune 500), which currently offer Windows on most of their product lines.

Google's Chrome Internet browser, launched in late 2008, remains a distant fourth in the Web browser market, with a 1.2% share in February, according to market research firm Net Applications. Microsoft's Internet Explorer continues to dominate, with nearly 70%.

A spokesman for Microsoft had no immediate comment.

The new Chrome OS is expected to work well with many of the company's popular software applications, such as Gmail, Google Calendar and Google Maps.

Web-focused: It will be fast and lightweight, enabling users to access the Web in a few seconds, Google said. The new OS is based on open-source Linux code, which allows third-party developers to design compatible applications.

"The operating systems that browsers run on were designed in an era where there was no Web," Sundar Pichai, vice president of product management at Google, said in the blog post. The Chrome OS is "our attempt to re-think what operating systems should be".

Google said Chrome OS was a new project, separate from its Android mobile operating software found in some smartphones. Acer Inc., the world's No.3 PC brand, has already agreed to sell netbooks that run Android.

The new OS is designed to work with ARM and x86 chips, the main chip architectures in use today.

Charlene Li, partner at consulting company Altimeter Group, said Google's new OS will initially appeal to consumers looking for a netbook-like device for Web surfing, rather than people who use desktop PCs for gaming or high-powered applications.

But eventually, the Google OS has the potential to scale up to larger, more powerful PCs -- especially if it proves to run faster than Windows, she said.

Enderle expects Google to charge at most a nominal fee for the new OS, or make it free, saying the company's business model has been to earn revenue off connecting applications or advertising.

Li added: "A benefit to the consumer is that the cost saving is passed on, not having to pay for an OS."

"It's clearly positioned as a shot across the bow of Microsoft," she said. To top of page

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