Didn't Microsoft (Nasdaq: MSFT) get in trouble for this?
Google (Nasdaq: GOOG) unveiled a new Chrome operating system designed to be used with netbooks specifically made for the browser. One neat feature about the OS is that you turn on the PC and -- whoosh! -- you're immediately surfing the Internet. Pretty cool.
Nothing but 'Net
Yet by initially targeting netbook manufacturers like Asus, Dell (Nasdaq: DELL), and Hewlett-Packard (NYSE: HPQ), Google hopes to drive more traffic to the Web, where users can interact with its $22 billion advertising business. And users will have to go to the Internet because Chrome only allows usage of Web applications so data can only be stored "in the cloud," not a hard disk drive. It will use memory chips instead to cache data.
That means Chrome functions more like a Web browser similar to Internet Explorer or Apple's (Nasdaq: AAPL) Safari than an operating system. It also increases the likelihood of corralling people toward its search capabilities -- Google is already the default search engine in Chrome browsers -- and that's where it enters territory that got Microsoft into trouble.
Is it evil or innovative?
While the case against the Evil Empire was multifaceted, the one the anticompetition commissars in Europe shook down Microsoft for was the integration of Internet Explorer with its Windows operating system. Yet here's Google manufacturing a browser that's designed to operate like an OS (reversing what Microsoft did), but is ultimately a Trojan horse driving people to where Google can make the most money off of them.
And similar to Microsoft's "bundling" practices, Google is giving away the OS for free, just as Verizon (NYSE: VZ), Motorola (NYSE: MOT), Samsung, and others benefitted from Google giving away its smartphone OS Android.
Even though Mr. Softy charges less for netbook versions of Windows, margins on netbooks are already razor thin. Free software is an enticement to manufacturers to juice profits by integrating Chrome into their products. This is innovative, not anticompetitive, but it seems more insidious than how Microsoft's symbiotic system worked.
Times change, people change
Admittedly it's not a straight-up comparison. In the years since Microsoft first fell into regulators' crosshairs, the browser/OS landscape has changed. As Chrome makes clear, the browser is the operating system. Moreover, plug-ins for Chrome enable users to replicate other systems or improve their functionality, including Internet Explorer.
No flight plan
While netbooks are the fastest-growing segment of PCs -- the market researchers at IDC estimate sales doubling to 20 million units this year -- storing sensitive data in the cloud might limit a Chrome-based netbook's ubiquity. It hinges on users' willingness to risk a catastrophic system failure like the one that grounded the nation's air traffic control system yesterday, rendering their data inaccessible.
Along with its offline limitations, a Chrome OS may not be the game-changer Google hopes for, even if it doesn't invite closer regulatory scrutiny.
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