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Until now, most consumer PCs have run on software from one of two
companies: Microsoft or Apple.
But on Wednesday, search giant Google (GOOG) shook up the computing
world by formally announcing plans to compete head-to-head against
those companies on their home turf: PC operating systems.
EARLIER: Net giant readies own operating system
Google gave notice that it's developing its own PC operating system
initially targeted at netbooks, those pint-size, inexpensive PCs
currently selling like hot cakes. Google is meeting with hardware
manufacturers and hopes to have it on computers by the second half of
2010.
Google's goal is to be the opposite of today's operating systems
especially Windows, which commands 90% of the market. The ubiquitous
software has a reputation as virus-prone and complicated. Google says
its Google Chrome Operating System will be faster, smoother and
lightweight.
An outgrowth of Google's Chrome Internet browser, the OS is designed
"to start up and get you onto the Web in a few seconds," Google said
in its official blog post announcing the product. Google says it can
achieve that by building a system from the ground up, one that isn't
constrained by working with a legacy system initially built in the
1980s.
Now, all it must to do is execute.
Unlike Windows, Chrome is an open-source project like the Linux
operating system that's popular with techies, which means outside
software developers are welcome to work on it. And Google believes
developers who have a stake in the project will find a way to bring
Chrome to a wide variety of PCs quickly, says a person with direct
knowledge of Google's intentions, who isn't authorized to speak on
behalf of the company.
Love it or hate it, Microsoft (MSFT) sells some 400 million copies of
Windows annually. PC manufacturers Dell (DELL), Hewlett-Packard
(HPQ), Lenovo, Acer, Toshiba and more offer Windows on most PCs.
When Microsoft comes out with a new operating system as it will in
the fall with Windows 7 that's what most consumers get when they
purchase a new PC. Microsoft declined to comment on Google's
announcement.
But Google's operating system will be free, compared with the average
$45 per machine manufacturers pay for Windows.
"Microsoft has a real problem," says Charles Wolf, an analyst at
Needham & Co. "HP can now say to Microsoft, 'We've got a great
operating system (Google) that doesn't cost us anything what are you
going to do about it?' " Linux, too, is sometimes free, but it can be
hard to use.
Still, for consumers, "The learning process of any change is so
substantial, most people will resist it, unless Google can really show
a compelling reason," says Phil Leigh, an analyst for Inside Digital
Media. "Most will stick with what they know."
The battle is on
Google has been locked in a battle with Microsoft for years.
Microsoft urges consumers to use its MSN.com as a home page on the
Web, to make its new Bing (formerly Live) their search engine of
choice, and to use its Internet Explorer browser, effectively
bypassing Google.
Google the most visited website worldwide countered last year with
Chrome, its own browser. It says some 30 million people are using it
now.
Don't like Microsoft's Office software? Google offers online word
processing, spreadsheet and presentation programs that are free.
Microsoft, which has been trying to catch up to Google's dominance of
search advertising (5.5% vs. 72% market share in April, according to
Hitwise), recently launched Bing, a well-received search overhaul
that's been advertised heavily.
In reaching for Microsoft's cash cow, the operating system, analysts
say, Google is in for a tough haul.
"Google will find that it's much harder than it looks," says Roger
Kay, president of Endpoint Technologies Associates. "There're all
those drivers and devices that have to be supported."
Microsoft has huge customer service departments. As anyone who's ever
tried to contact Google knows, there are no customer service reps to
call on the phone.
Microsoft is unaccustomed to having operating system competitors, but
Kay says "it will do whatever it can to fight back."
Chrome isn't Google's first operating system. With more consumers
conducting searches on mobile devices, Google launched Android, an
operating system for phones.
The clash of tech titans has rekindled questions about whether either
has what it takes to diversify beyond their respective core
businesses. Microsoft, for instance, continues to derive some 80% of
its revenue from selling the Windows operating system and Office
suite; this despite pouring billions into search advertising, online
services, video games and other businesses.
Similarly, Google gets 97% of its revenue from online advertising,
despite multiple attempts to diversify with Google Apps, instant
messaging, photo-editing software and Android.
Android could get to a netbook before Chrome does: Upstart PC maker
Acer announced in June that it would begin selling Google netbooks in
October based on Android. Acer declined to comment for this story.
Taking it online
Trip Chowdhry, an analyst at Global Equities Research, says Google
will begin getting netbook customers by targeting the 60 million users
of its Gmail e-mail service. "The influencing power will be on the
company that can provide a branded and exceptional online experience."
Microsoft sells 400 million copies of Windows yearly. "Can that 400
million become 800 million?" asks Chowdhry. "Not likely. Can Google's
60 million grow to 1 billion? Yes."
Matt Rosoff, an analyst at research firm Directions on Microsoft, says
Google will need to counter Microsoft's strong marketing and consumer
support with efforts of its own.
"It will need to devote serious marketing resources to explain to
average consumers, not just tech enthusiasts, why they'd want this new
OS," he says.
Analysts see Apple (AAPL) getting hurt by Google's challenge, as well.
A Google netbook at $300 would be $700 less than Apple's current entry-
level laptop, the $999 MacBook.
"The growth in the market is coming from netbooks, and Apple's been
missing that," says Gene Munster, an analyst at Piper Jaffray. "We
believe Apple will respond with a netbook in the first quarter of next
year but it will be more expensive than Google's."
Meanwhile, Microsoft is going to be anything but quiet this year. It
can fall back on deep relationships with software developers and
retailers. And it will almost certainly tweak pricing and features of
Windows 7 to compete, Rosoff says.
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companies: Microsoft or Apple.
But on Wednesday, search giant Google (GOOG) shook up the computing
world by formally announcing plans to compete head-to-head against
those companies on their home turf: PC operating systems.
EARLIER: Net giant readies own operating system
Google gave notice that it's developing its own PC operating system
initially targeted at netbooks, those pint-size, inexpensive PCs
currently selling like hot cakes. Google is meeting with hardware
manufacturers and hopes to have it on computers by the second half of
2010.
Google's goal is to be the opposite of today's operating systems
especially Windows, which commands 90% of the market. The ubiquitous
software has a reputation as virus-prone and complicated. Google says
its Google Chrome Operating System will be faster, smoother and
lightweight.
An outgrowth of Google's Chrome Internet browser, the OS is designed
"to start up and get you onto the Web in a few seconds," Google said
in its official blog post announcing the product. Google says it can
achieve that by building a system from the ground up, one that isn't
constrained by working with a legacy system initially built in the
1980s.
Now, all it must to do is execute.
Unlike Windows, Chrome is an open-source project like the Linux
operating system that's popular with techies, which means outside
software developers are welcome to work on it. And Google believes
developers who have a stake in the project will find a way to bring
Chrome to a wide variety of PCs quickly, says a person with direct
knowledge of Google's intentions, who isn't authorized to speak on
behalf of the company.
Love it or hate it, Microsoft (MSFT) sells some 400 million copies of
Windows annually. PC manufacturers Dell (DELL), Hewlett-Packard
(HPQ), Lenovo, Acer, Toshiba and more offer Windows on most PCs.
When Microsoft comes out with a new operating system as it will in
the fall with Windows 7 that's what most consumers get when they
purchase a new PC. Microsoft declined to comment on Google's
announcement.
But Google's operating system will be free, compared with the average
$45 per machine manufacturers pay for Windows.
"Microsoft has a real problem," says Charles Wolf, an analyst at
Needham & Co. "HP can now say to Microsoft, 'We've got a great
operating system (Google) that doesn't cost us anything what are you
going to do about it?' " Linux, too, is sometimes free, but it can be
hard to use.
Still, for consumers, "The learning process of any change is so
substantial, most people will resist it, unless Google can really show
a compelling reason," says Phil Leigh, an analyst for Inside Digital
Media. "Most will stick with what they know."
The battle is on
Google has been locked in a battle with Microsoft for years.
Microsoft urges consumers to use its MSN.com as a home page on the
Web, to make its new Bing (formerly Live) their search engine of
choice, and to use its Internet Explorer browser, effectively
bypassing Google.
Google the most visited website worldwide countered last year with
Chrome, its own browser. It says some 30 million people are using it
now.
Don't like Microsoft's Office software? Google offers online word
processing, spreadsheet and presentation programs that are free.
Microsoft, which has been trying to catch up to Google's dominance of
search advertising (5.5% vs. 72% market share in April, according to
Hitwise), recently launched Bing, a well-received search overhaul
that's been advertised heavily.
In reaching for Microsoft's cash cow, the operating system, analysts
say, Google is in for a tough haul.
"Google will find that it's much harder than it looks," says Roger
Kay, president of Endpoint Technologies Associates. "There're all
those drivers and devices that have to be supported."
Microsoft has huge customer service departments. As anyone who's ever
tried to contact Google knows, there are no customer service reps to
call on the phone.
Microsoft is unaccustomed to having operating system competitors, but
Kay says "it will do whatever it can to fight back."
Chrome isn't Google's first operating system. With more consumers
conducting searches on mobile devices, Google launched Android, an
operating system for phones.
The clash of tech titans has rekindled questions about whether either
has what it takes to diversify beyond their respective core
businesses. Microsoft, for instance, continues to derive some 80% of
its revenue from selling the Windows operating system and Office
suite; this despite pouring billions into search advertising, online
services, video games and other businesses.
Similarly, Google gets 97% of its revenue from online advertising,
despite multiple attempts to diversify with Google Apps, instant
messaging, photo-editing software and Android.
Android could get to a netbook before Chrome does: Upstart PC maker
Acer announced in June that it would begin selling Google netbooks in
October based on Android. Acer declined to comment for this story.
Taking it online
Trip Chowdhry, an analyst at Global Equities Research, says Google
will begin getting netbook customers by targeting the 60 million users
of its Gmail e-mail service. "The influencing power will be on the
company that can provide a branded and exceptional online experience."
Microsoft sells 400 million copies of Windows yearly. "Can that 400
million become 800 million?" asks Chowdhry. "Not likely. Can Google's
60 million grow to 1 billion? Yes."
Matt Rosoff, an analyst at research firm Directions on Microsoft, says
Google will need to counter Microsoft's strong marketing and consumer
support with efforts of its own.
"It will need to devote serious marketing resources to explain to
average consumers, not just tech enthusiasts, why they'd want this new
OS," he says.
Analysts see Apple (AAPL) getting hurt by Google's challenge, as well.
A Google netbook at $300 would be $700 less than Apple's current entry-
level laptop, the $999 MacBook.
"The growth in the market is coming from netbooks, and Apple's been
missing that," says Gene Munster, an analyst at Piper Jaffray. "We
believe Apple will respond with a netbook in the first quarter of next
year but it will be more expensive than Google's."
Meanwhile, Microsoft is going to be anything but quiet this year. It
can fall back on deep relationships with software developers and
retailers. And it will almost certainly tweak pricing and features of
Windows 7 to compete, Rosoff says.
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