In its most direct challenge yet to rival Microsoft Corp., Google Inc. is developing an operating system for personal computers based on its Chrome Web browser.
The move heightens the competition between the two technology giants as Google tries to hit the competition's most lucrative business. Microsoft's Windows operating system is the basis for the functions of most of the world's PCs, with about 88 per cent of North America's market share.
Google is looking to attract a large initial audience accustomed to its brand and ease of use when the operating system is launched in the second half of 2010.
"We're designing the OS to start up and get you onto the Web in a few seconds. The user interface is minimal to stay out of your way, and most of the user experience takes place on the Web," the company said in a blog post last night.
Google will open source its code for the new browser, making it publicly available to outside programmers.
Analysts see the announcement as a natural extension of Google's attempt to attract more people to its online tools.
"We're just surprised it took so long," Broadpoint.AmTech analyst Benjamin Schacter said in a note yesterday. "The release of an operating system is just another part of Google's strategy to more rapidly and cheaply spread access to the Internet via a multitude of different devices."
Netbooks - small laptop computers geared for Internet and basic software use - mark a growing segment in the PC market and will be the first destination for Chrome OS.
Microsoft's new Vista operating system software does not run on most netbooks, although the company plans to release a netbook-friendly version of Windows 7 in October.
Google's move highlights a more general trend in computing circles.
"The Chrome OS is more about building on Google's vision for a cloud-based architecture. It actually de-emphasizes the operating system," said Douglas Anmuth of Barclays Capital.
In cloud-based computing, some of the computing power and storage exists with servers residing elsewhere, rather than on the user's personal computer.
This is Google's second large open-source operating system launch in nine months; its Android system is geared to mobile phones, and will also run on a new Acer netbook model in October. But the two projects are largely distinct, Google said.The company will develop the Chrome OS to run on both conventional microcomputer chips and on the ARM chips that are geared to netbooks.
The prospect of a fast and lightweight operating system could give Google an entryway into other software products.
In the longer term, the announcement "absolutely" targets Microsoft's market beyond Windows, said Paul Jackson of Forrester Research.
The Chrome OS could dovetail with Google's free Google Apps word-processing, spreadsheet and presentation applications. But Microsoft's larger and for-pay versions - Word, Excel and PowerPoint - currently dominate that market.
Analysts expect Google to offer their operating system to computer manufacturers for free, which could bring computer prices down. As with other Google offerings, the company would make money from the increased advertising opportunities, likely through the increased market for Google search and other Google products that Chrome could drive users toward.
But there are several challenges awaiting the project before it is launched, including an increasingly crowded market for operating systems.
In addition to Microsoft and Apple,Chip maker Intel is developing an open-source operating system, known as Moblin.
And as netbooks increase in popularity, other mobile-phone-based operating systems could make the jump to computers.
Breaking into the business market, which accounts for almost one-third of Microsoft's annual revenue, and more than half of its annual profit, may be difficult.
"If you're looking at the mindset of a company's enterprise IT director, they're looking at reliability over cost," Forrester's Mr. Jackson said.
He noted that as more computing power and memory goes outside the home computer, the capacity of the Internet service provider and the data centre that stores your information will come into play. Both of these are largely outside the user's control.
Finally, people who use the new operating system could be giving up even more information to Google than they do already, privacy consultant Bob Gellman said. "This basically extends their ability to track what you do, to any computer activity."
And Google's response?
"We provide strong notice when users sign up for products that may collect personally identifiable information, and we offer users choices about what information we collect and how that information is used," Google spokeswoman Tamara Micner said.
"Within Google Chrome, for instance, users can opt to browse in Incognito Mode if they don't want their Web history or downloads recorded."
Online extra: Canadian open-source software pioneer Bob Young on the Google announcement, at http://www.reportonbusiness.com.
GOOGLE INC. (GOOG)
Close: $402.49 (U.S.), up $5.86
MICROSOFT CORP. (MSFT)
Close: $22.56, up 3¢
September, 1998: Google incorporated
March, 2003: Content-targeted advertising service launched
August, 2004: Google IPO
February, 2005: Google Maps
October, 2006:Acquisition of online video streamer YouTube. Launch of Google Docs
September, 2008: Launch of Chrome browser
October, 2008:Introduction of Android, an open-source operating system for use on mobile phones
July, 2009: Announcement that Chrome will be turned into an open-source operating system in 2010, to be available initially on netbooks, and later on other laptops and personal computers.
July, 1995: Launch of Windows 95 and Internet Explorer
August, 1995: Launch of online service MSN
May, 1998: U.S. Department of Justice files antitrust claims against Microsoft
October, 2001: Release of Windows XP operating system
November, 2005: Release of Microsoft Live online suite
January, 2007: Release of Vista operating system and Microsoft Office 2007
June, 2009: launch Bing, a new version of the Microsoft Live search engine.
October, 2009: Windows 7 expected to be available