Google to Offer Full-Blown OS for Netbooks

Google was rumored to be developing an operating system. Then we got Android (an OS for mobile devices) and Chrome (a browser that is like an OS in some respects). Everybody forgot about the alleged Google OS. Well last night Google in fact announced an OS: Chrome (not to be confused with the browser). From the Google Blog post:

Google Chrome OS is an open source, lightweight operating system that will initially be targeted at netbooks. Later this year we will open-source its code, and netbooks running Google Chrome OS will be available for consumers in the second half of 2010. Because we're already talking to partners about the project, and we'll soon be working with the open source community, we wanted to share our vision now so everyone understands what we are trying to achieve . . .

Google Chrome OS will run on both x86 as well as ARM chips and we are working with multiple OEMs to bring a number of netbooks to market next year. The software architecture is simple — Google Chrome running within a new windowing system on top of a Linux kernel. For application developers, the web is the platform . . .

Google Chrome OS is a new project, separate from Android. Android was designed from the beginning to work across a variety of devices from phones to set-top boxes to netbooks. Google Chrome OS is being created for people who spend most of their time on the web, and is being designed to power computers ranging from small netbooks to full-size desktop systems. While there are areas where Google Chrome OS and Android overlap, we believe choice will drive innovation for the benefit of everyone, including Google.

In his remarks on the most recent Google earnings call, CEO Eric Schmidt said: 

There are announcements happening between now and the end of the year that are quite significant from operators and new hardware partners in the Android space, which I won’t preannounce except to say that they really do fulfill much of the vision that we laid out more than a year ago.

On the netbook side, there are a number of people who have actually taken Android and ported it over to netbook or netbook-similar devices. So we think that’s another one of the great benefits of the open source model that we’ve used. We’re excited that that investment is occurring. And again, largely outside of Google, which we think is great.

He must not have exclusively been referring to Android. Although the company says that Android and Chrome OS will overlap, the latter is explicitly for netbooks. We already have one Android netbook and Acer's announcement of a Q3 netbook release. Other hardware OEMs may want to wait for Chrome. But they will wait until 2010 for it to become available. 

Chrome the OS will also be able to power full-sized PCs. Most of the PC market however is migrating from desktops to laptops and netbooks. The fact that it's a free OS will attract hardware OEMs in the same way Android has in the mobile space. With margins getting ever thinner in the PC-netbook world and a de-facto price ceiling for laptops starting to emerge, OEMs will be looking for any margins they can retain -- or, conversely, to compete more aggressively with new low-cost devices. 

All of this represents a potentially huge problem for Microsoft (and to a lesser degree maybe Apple), depending on how good the new OS is.