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Finally, Some Insightful Commentary about the Implications of Chrome OS

Posted Jul 31 2009 11:45am

Much has been made of the recent announcement of Google that it is converting its browser, Chrome, to Chrome Operating System. I have tracked this story closely with an eye toward posting a blog note about the topic but none of them made much sense to me until I read the recent commentary by Robert Cringely (see: Chrome vs. Bing vs. You and Me ). Below is an excerpt from it:

The battle between Microsoft and Google entered a new phase last week with the announcement of Google’s Chrome Operating System — a direct attack on Microsoft Windows....This is all heady stuff and good for lots of press, but in the end none of this is likely to make a real difference for either company or, indeed, for consumers.... Microsoft makes most of its money from two products, Microsoft Windows and Microsoft Office. Nearly everything else it makes loses money, sometimes deliberately. Google makes most of its money from selling Internet ads next to search results. Nearly everything else it does loses money, too. Neither company really cares because both make so much from their core products that it simply doesn’t matter....The vast majority of Google searches are, of course, done on PCs running Microsoft Windows and Internet Explorer. It is not in Google’s real interest to displace these products, which have facilitated so much of its success. Chrome products are given away, so they bring in no revenue for Google, and they don’t even provide a better search or advertising experience for their users, the company admits. So why does Google even bother? To keep Microsoft on its toes....This makes even more sense given the recent advent of Microsoft’s Bing search technology, which performs precisely the same competitive control function against Google. Bing hasn’t a hope of toppling Google as the premier search engine and Microsoft knows it. To date, Bing’s success has actually been at the expense of Google’s competitors, not Google itself. But thanks to Microsoft’s deep pockets and fierce screwball reputation, Bing has already accomplished its main purpose: reminding Google executives who they’re messing with.

To summarize, Google needs Microsoft badly because PCs running Windows are critical for web search, which is the source of most of its profits. Microsoft needs Google badly because Google search is valuable for PC users browsing the web. It's one of the major reasons for owning such a device. Google has developed Google Apps, which will never displace Microsoft Office, to put Microsoft on warning. Microsoft recently offered its new search engine, Bing, to keep Google on its toes. By the way and for readers arriving at this blog, the most commonly used search engine is Yahoo; next comes Bing and Google competing for second and third place. Bing rose to this position in a matter of weeks but Microsoft has various ways to promote its products on the Windows desktop. Incidentally, Bing is a very good search engine.

I believe that Chrome OS may eventually allow netbooks to operate more efficiently for users who work mainly in the cloud. The price of laptops, soon powered by Windows 7, (Goodbye, Vista, you will not be missed) keeps dropping, rivaling the rock-bottom price of netbooks. The only way that netbooks will survive is if they continue to be cheaper, lighter, and faster than laptops. This is a fluid situation, at least at Wal-mart. In my view, all of this competition is very healthy. However, netbooks powered by Chrome OS will only be a niche market. It's a standoff for Microsoft and Google and both of them continue to do pretty well in this little game.
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