It would not be accurate to say that Larry Page is wasting time in his new and old position of the company he co-founded. He is leading an empire that has a solid business foundation, massive resources, and deep pockets to reach well beyond its core market. Page's management changes set new incentives clearly designed to keep its top leadership hungry. Google's (Nasdaq: GOOG) eyes appear to be laser-focused on Microsoft (Nasdaq: MSFT). Is Google strong enough to bring Microsoft down to its knees?

We have seen several large IT companies getting rid of high-ranking executives lately, in an apparent effort to reset their organizations to be much more competitive in a changed business environment. However, we are seeing most of those companies virtually standing still, while Google is making dramatic changes and is moving possibly at a much faster pace. Media reports indicate that Page promoted seven executives to report directly to him, five of whom are engineers. Those executives will lead key services such as YouTube, Android, Chrome, ad sales, and social networking. Twenty-five percent of employee bonuses are now tied to the success of social-networking initiatives.

The most surprising -- depending on your view -- promotion may have been that of Sundar Pichai, who is now senior vice president of Chrome. TechCrunch reported that he may have received up to $50 million for this job, while other sources over at Business Insider suggest that the number was closer to $10 million. All that for developing a free product that doesn't earn any money? That may be the case on the surface, but Chrome is Google's most important product in a future expansion beyond search and Android, and Google will shine or fall with Chrome.

Chrome isn't just a browser. Chrome is a platform and is also the foundation of an operating system (ChromeOS) for commodity computing devices. Google is the first company that is essentially merging the browser and the operating system to push a cloud-computing strategy that is conclusive and could work, as long as Google keeps an eye on the rather slow ISP and mobile-carrier network in the United States. We know that Chrome is currently receiving a touch UI, which may be integrated in Chrome OS for touch-specific cloud devices such as low-cost tablets.

It does not take much to see that Google will be challenging Microsoft on the OS level later this year from the very bottom of the market, where Google can easily achieve millions of sold units as long as the price of these devices remains in the $200 range. It could establish Google as a major OS player that will battle Microsoft for a substantial share of the OS market.

Page is apparently convinced that Pichai has the ability to develop and position Chrome to give Google a shot at the OS play. It isn't clear, however, how ChromeOS will be positioned against Android: Android is a very app-centric platform for mobile devices that happens to also offer a browser as an app. ChromeOS is a browser that enables users to install apps, but the key feature remains Web browsing (while only 10% of the time spent on an Android device is actually spent on Web browsing.) The monetary incentive Page has thrown out should be enough to get Pichai moving.

Windows accounts for about $5 billion of the $20 quarterly revenue at Microsoft and gave Microsoft an operating profit of $3.2 billion (of a total of $8.1 billion) in the most recent quarter. Even more important is Microsoft's Office division, which raked in about $6 billion in revenue and $3.7 billion in operating profit in the most recent quarter. Google also has a solid base of cloud services, including an office package, and it recently attacked Microsoft's Office user base directly. There is little doubt that Google now believes it is strong enough to sustain and win an open war with Microsoft. Chrome is the queen in this game, and Page has just put it into play.

It will be interesting to see how Microsoft will react -- if it reacts. Microsoft is not moving fast enough, and it appears that it is currently tied up with Bing, which isn't growing anymore. It's an almost impossible mission to catch up with iOS and Android. Microsoft’s history is full with examples of being late to an important market, but it never had to deal with a company as strong and powerful as Google. There is a good chance that Page is directly going after Microsoft's core markets.

Google will be moving into new territory, and it still has to show that it can successfully establish new business segments besides search and Android. Steve Ballmer, however, should take this threat seriously. I doubt that Page is putting millions of dollars into Chrome just to annoy Microsoft and steal IE browser market share.

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