Thursday, July 09, 2009

Google getting into PC OS with Chrome OS

Google recently announced that it will be launching a new PC OS called Chrome OS. When I first read about this on NYT two days ago, my immediate reaction was that it was a great move by Google to launch Chrome OS. There are number of problems with MS's Windows OS for both consumers and PC hardware makers that makes the Chrome OS a viable option that could further threaten MS's dominance in the PC software business. One of the biggest problems with Windows for consumers is that it has become so complicated and bloated that it takes few minutes to boot up. Google's Chrome OS promises to boot up and have you on the web in a few seconds. PC makers are desperately negotiating with Microsoft to reduce the per unit license fee of $75 for Windows 7 because the average PC price has gone down from something like $1500 few years ago to $600 today. The margin is so tight that a viable, cheaper OS alternative like Chrome OS that is standards based could be very attractive. Now, Windows franchise will not go away over night because a lot of people are still using Outlook, Word, Excel and Powerpoint applications but as the world continues to move toward the web/cloud computing model and more and more applications with backward compatibility are available on the web for fee or at minimal cost Microsoft will start to loose market/revenue share (here again Google threatening MS with Gmail, and dozens of other free web services). Microsoft is no longer a dominant company that it used to be in the 80s and 90s (their stock price today is where it was 8 years ago). Google is the dominant player in the web era. In my opinion, this is a good strategic move by Google to threaten Microsoft while Microsoft tries to threaten Google with Bing search engine. It will be interesting to see how these two goliaths of the tech business strategize and compete in the coming years and decades.


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