Financial News

LONDON (ShareCast) - The widely expected announcement by Google (NASDAQ: GOOG - news) of a new computer operating system based on its Chrome browser represents a potentially fatal threat to Microsoft (NASDAQ: MSFT - news) , the company which has owned the PC desktop since it released MS-DOS in 1983.

Google's new operating system will initially be targeted at netbooks, the fastest growing sector of the PC hardware market. The mini-sized laptops, capable of performing basic tasks such as Internet browsing and word processing, initially became very popular because of their low cost, and part of the reason they were so cheap was because they used the open source (public domain) Linux operating system rather than Microsoft's Windows system.

However, computer geeks who were hoping that netbooks would prove to be the Trojan horse that brought down the Microsoft empire were disappointed when the majority of users opted to pay extra to use the operating system with which they were familiar, namely (a sawn-off version of) Microsoft Windows XP, rather than the often baffling, frustrating, unintuitive, command line driven Linux system.

In short, the customer has chosen to go with the familiarity of Microsoft.

What's more familiar than Microsoft in the Internet age?

Google.

Google's vice-president of product management, Sundar Pichai, and Linus Upson, engineering director at Google, said on a company blog site: "We hear a lot from our users and their message is clear — computers need to get better. People want to get to their email instantly, without wasting time waiting for their computers to boot and browsers to start up. They want their computers to always run as fast as when they first bought them."

"Even more importantly, they don't want to spend hours configuring their computers to work with every new piece of hardware, or have to worry about constant software updates," Pichai and Upson added.

The statement not only reads as a blatant challenge to Microsoft's patched-up operating system but suggests Google is confident that its own open-source Linux-based operating system will prove a lot more user-friendly than the umpteen versions of Linux that are currently out there.

Apple (NASDAQ: AAPL - news) 's experience with its iPhone suggests that a dominant industry force can bank on developers rushing to produce "killer applications" for a popular product. All Google has to do is produce a fast, lightweight, secure and, most of all, easy to use interface and let the developers do the rest.

"We have a lot of work to do, and we're definitely going to need a lot of help from the open source community to accomplish this vision," said Pichai and Upson.

Google has already hinted that the new operating system will be minimalist, as is the company's house style.

"We are going back to the basics and completely redesigning the underlying security architecture of the OS [operating system] so that users don't have to deal with viruses, malware and security updates," the company said.

Microsoft has seen off every serious rival for its desktop crown; it wrenched control of the operating system away from IBM (NYSE: IBM - news) , smothered Netscape in the short-lived Internet browser wars and crushed WordPerfect in the office productivity software battle. There were even rumours that it held off dealing the death blow to Apple when that company was struggling before the second coming of its co-founder Steve Jobs, so as to avoid accusations of being a monopoly.

No one can accuse Microsoft of not attempting to evolve. It bought up the Hotmail web-based mail system while its MSN Messenger is popular with teenagers the world over.

Yet while Apple has achieved runaway success with its diversification away from personal computers, Microsoft has not been able to use its commercial might and dominance of the desktop to achieve similar success.

It brought out its iPod basher, the Zune, but the product is lagging well behind its trendy rival, with sales down disastrously over the Christmas period in 2008.

Its big decision, however, will be whether and, if so, when, to encourage its customer base to move over to online versions of its flagship products. Back in the days when smart-alec college drop-out Bill Gates was driving the company it still had a reputation for being bold and ruthless. Increasingly these days it looks more like a conservative company interested in maintaining a business model that is rapidly getting past its sell by date.