Analysts say that if the new Linux-based operating system catches on quickly after it becomes generally available late next year, Google's effort to convince corporate users that its hosted Google Apps offering is a viable alternative to Microsoft's Office suite could get a huge boost.
"This really is a fight to the death for Google and Microsoft," said Jim McGregor, an analyst at In-Stat. "It is a fight between business models for software, applications, advertising and the Internet."
During a press conference held in mid-November to demonstrate the capabilities of the new operating system, Google officials made it clear that Chrome OS can't fully replace Windows.
The new offering only runs Web-hosted applications and only supports peripherals that comply with specific hardware designs. For example, Google officials said that Chrome will support solid-state disk drives, and not hard disk drives, to ensure speedy PC start-up times.
Therefore, when Chrome OS-based netbooks hit the market at the end of 2010, Google expects them to be "companion" devices that users will run alongside conventional PCs.
"There are applications today that aren't available on the Web," said Sundar Pichai, Google's vice president of product management. "We're really focused. We expect that most people who buy [Chrome netbooks] next year ... [will] have another machine."
The company built Chrome OS to offer users "a delightful experience on the Web," Pichai added. "There will be some things this will not be able to do. If you're a lawyer planning to spend your entire day editing contracts back and forth, this isn't the right machine."
Therefore, Chrome users have to be very comfortable with cloud computing and its basic premise of keeping their data and applications in third-party data centers.
"For most people most of the time, the PC is just a Web player," said Ezra Gottheil, an analyst at Technology Business Research Inc. "Google is leveraging its Web expertise to strip away a lot of the stuff that people don't use as much anymore, and delivering an OS optimized for the Web. This makes business sense for Google. Getting in Microsoft's grill is just gravy."
People who evaluate Chrome using criteria commonly applied to conventional desktop operating systems are missing the point, said Gartner Inc. analyst Ray Valdes. "Some people have been asking, 'Can I run full-fledged Photoshop or full-fledged Excel on Chrome OS?' and 'What about all the device drivers and peripheral cards?' These were never part of the mission," Valdes said. "That war was fought and won long ago, mostly."
Valdes said that to succeed, Chrome OS will have to revitalize the netbook market, which has been slowing down as conventional laptops have become cheaper. It will also be critical for hardware vendors to make a genuine commitment to the Chrome OS and not just use it as a bargaining chip to get better prices on Windows licenses from Microsoft, he added.
Chrome's unveiling came less than six months after Microsoft released its refurbished search engine, Bing, to take on Google's eponymous search tool.
"The war between Microsoft and Google will play out over several years," said Dan Olds, an analyst at Gabriel Consulting Group Inc. "We won't see an absolute winner or loser, but more trench warfare, with each gaining temporary advantages."
Microsoft downplayed Google's impact on the operating system market, at least for the near term. Chrome OS "appears to be in the early stages of development," a spokeswoman said.
Perez is a reporter for the IDG News Service. Computerworld's Eric Lai and Lucas Mearian contributed to this story.