Does the Google Chrome OS Matter?

Rich Tehrani : Communications and Technology Blog -
Rich Tehrani
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Does the Google Chrome OS Matter?

It was a given that Google would eventually formally announce a new OS for netbooks and other computers. The company already has its Android OS in a number of cellphones and the netbook space is the next logical move upmarket for the company.

While Google's Android has been successful in the mobile market it has the potential to be even more successful in the netbook space where cost is a bigger issue. Indeed a number of netbook prototypes showed up last month at Computex in Taiwan recently.

What does Google have going for it so far in the world of software so far? Well, the Chrome browser is blazing fast but then again so is Apple's Safari which not only screams but it is a more elegant piece of software.

Google is a machine of rolling out new applications and services but the company's approach to software is much too sparse for my taste. I hate to bring the iPhone/Gphone comparison again but if given a choice the Apple interface is always better - and by a long-shot - and remember - I am NOT an Apple guy - but an impartial advisor/analyst.

But if cost-savings is paramount then this new OS could damage both Apple and Microsoft as it is another choice from a familiar name.

Most importantly Google makes the bulk of its revenue from ads and you can bet users of the Chrome OS will see more ads than Mac or Windows 7 users.

This leads us to subsidization of the OS. Google can afford to sink billions of dollars in this OS if it chooses as it will easily make the cost up in increased ad revenue.

This is in stark contrast to Microsoft. Apple on the other hand does get to sell its hardware when a consumer opts for the Mac OS. There is even a high likelihood that an Apple user will be an iTunes subscriber - another added plus.

The downside to Google in this move is the relationship with Apple will have to be diminished because of the Interlocking Doctorates rule which prohibits someone serving on a rival company board if it has the potential to reduce competition. So Eric Schmidt will have to step down from the Apple board soon in my opinion. Ironically this is in stark contrast to the following statement made from Schmidt made just this past May:

The possibility "hasn't crossed my mind," Schmidt told reporters before the annual shareholders meeting at the company's Mountain View headquarters. "I don't think Apple sees Google as a primary competitor," he said.

I have to say after thoughtful analysis I agree with Melissa Perenson that the Chrome OS will have limited appeal. I would comment however that the Google name carries a lot of weight and people will be willing to take a leap to anew OS if they have enough familiar features. Still, I am not sure people are ready to give up on Microsoft Office as of yet. Sure I know many companies which have decided to standardize on Google Docs but many of them are open-source or SaaS companies like who have something to prove and are willing to put up with some pain in exchange for making a statement.

In the end, the problem for Google is simple... Microsoft's costs really don't scale linearly with their sales meaning they can give away their OS or price it low enough that Google will have a tough time competing. Microsoft has already had to compete with Linux for a decade and they are very experienced at coming up with ways to keep their products on computers in many countries that wanted to originally switch to Linux.

So until I see the new Chrome OS and am blown away by its newness, ease of use and innovative features, I remain highly skeptical.

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