Google Chrome: The science of free economics
Google Inc. (GOOG) has announced a new operating system that is specifically targeted at netbooks. The Google Chrome, as it is called, is expected to hit the market in the second half of 2010.
Meanwhile, Google’s new Android operating system (specially designed for mobile phones) has already been selected for Acer netbooks (scheduled to launch in October this year). Apple (AAPL) has also indicated its intention to introduce its own netbook by the end of this year.
Since Microsoft (MSFT) dominates the netbook market, any competition irrespective of the source will take share from the company. So both Google and Apple can do significant damage.
But the real fear for Microsoft is Chrome’s potential to take over the entire PC market. Chrome will work with chips based on both x86 architecture from Intel (INTC) and Advanced Micro Devices (AMD), as well as ARM chips from ARM Holdings (ARMH). The specific areas targeted by Google include speed and cost, which could hit Microsoft where it hurts. It is claimed that the Google Chrome would boot and give Internet access in a matter of seconds, and would come to the consumer virtually free.
Google can make this happen, since it is using open source software from Linux, and its own revenues are dependent on advertisements rather than technology. The cost of Windows 7, to be launched in October this year, is currently expected to be similar to Vista.
Add to this the cost of MS Office and other applications, without which the computer would not be very useful. Chrome is also expected to come with security enhancements that would simplify virus-fighting activities.
Microsoft may have anticipated this move while launching Bing, its new search engine directly pitted against Google. Some critics opine that Google is falling behind in online display advertisements that include both images and text. This is an important segment within online advertising and is expected to outgrow the plain text area over the next few years. Google may have to pull up its socks if it wants to protect its revenue base.
We also believe that Google would need to make arrangements with leading PC makers such as Hewlett Packard (HPQ), Dell (DELL), Acer and others who currently use windows for the bulk of their products. Given that some Ubuntu (Linux-based operating system) models are already available, everyone is likely to weigh their options carefully. The battle could end up in a big war, especially if Microsoft is able to take share from Google in the online advertising area.
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