BANGALORE, INDIA: Google has finally announced its entry into the operating system (OS) market, with the Google Chrome OS set for release in the second half of 2010 on netbooks (to start with).

The company rightfully likes to try things out (for example, Chrome browser and now Chrome OS) but not all of its endeavours succeed. Its latest idea may fail to grow into a serious threat to Microsoft, although it has the potential to become an inconvenience in the netbook space.

Google as the Linux champion on netbooks

Google generates most of its revenues from advertising, but intends to diversify its revenue streams with offerings such as Google Apps, which have just (surprise, surprise) come out of beta and whose momentum the new OS aims to boost (along with Google Mail and Google Docs usage) in one of the only markets that is still showing some health: netbooks.

In a recent report entitled Netbooks: a Linux appliance opportunity we identified two main sequential trends in the netbook market.

The first is a shrinking netbook/laptop divide, with the average netbook price shooting up to $400. After a strong start in this market segment, Linux is now increasingly being distanced by Windows, although its performance is still outstanding compared to its overall performance in the desktop market. Google Chrome OS could potentially enable it to regain some of its lost ground.

The second trend is a reaction to the first, a back-to-basics backlash with ambition to deliver netbooks that are not only cheaper ($200 on average) but also designed as appliances/mobile Internet devices (MIDs) rather than would-be laptops. In this market Google Android, which is also Linux-based, is making good progress.

In response, Microsoft needs not only to push Windows 7 forwards but also to boost its Windows Mobile offering.

The battle is on price as well as user experience

Either free (as many expect) or low cost, the new Google OS will challenge Microsoft's ability to maintain profit margins. It will also challenge Windows from a user experience perspective, which is key to Linux-based netbook uptake. The objective is for it to "start up […] in a few seconds", to provide a "minimal" user interface that "stay[s] out of your way" and to be secure "so that users don't have to deal with viruses, malware and security updates".

It could also be the starting point for a more integrated experience across Google applications/services and we expect it, like Android, to be linked to an online store of web applications not just to make it easier to consume these applications but also to prove that they can meet most needs.

Internet-centric but not dependent

Google dismisses OSs "designed in an era where there was no web." The expectation behind its own OS is that "most of the user experience takes place on the Web". The key word here is 'most'.

With technologies such as Gears (that predates the Chrome browser and is embedded in it), and the Native Client plug-in and O3D API technologies that followed, Google is also working at enabling online applications to run offline. It needs to points this out more aggressively.

Keep things in perspective

The proof of the Google Chrome OS pudding will be in its eating. When the Google Chrome browser was released, in a report entitled Google enters the open source web browser fray we warned "don't fall for the hype; Google Chrome still has everything to prove." A few months later, despite Google claiming 30 million regular users, the browser has not made much impact.

Similarly we do not expect Google Chrome OS to take over the world, it is a bit late for that. With Windows 7 about to ship, it would have been better for Google to release, rather than simply announce, an alternative for the netbook market. Key to Google's OS success will be its ability to create a strong community around it. This is going to be difficult. A rethink of the project based on an alliance/convergence effort with the Ubuntu community could help. 

(Author is open source director at advisory and consulting firm Ovum)