This month’s statement that Google is to launch its own operating system – primarily aimed at Netbooks – demonstrates the continuing confidence exhibited by the team at Google even in the midst of a global downturn.
Any announcement by the Palo Alto team generates a huge amount of interest any planned press release by a modern corporation would be the same without the ensuing commentary generating a sprinkling of FUD (fear, uncertainty and doubt) at competitors. Certainly it is a wake-up call for the Microsoft team in Redmond prior to the release of Windows 7 but the end of Microsoft it is not.
The blog post from Sundar Pichai and Linus Upson (http://googleblog.blogspot.com/2008/09/fresh-take-on-browser.html), states that it will be free and it will be open source, developers will get the ability to write code but more than that will be revealed over the next few months.
Of more significance however, is the timing of the statement as well as whom Google have lined up as partners.
Vista’s share of the operating system (OS) market is still small compared to XP (XP is still used by almost 4 times as many people) and those users – who have seen little reason to upgrade to Vista, may be attracted to the Chrome OS to replace XP rather than investing in new hardware and software from Microsoft. In the middle of a recession where everyone is reigning in the expenditure, could this dent the uptake for Windows 7 sufficiently to force Microsoft to deep discount the product if consumer and business take up falters?
Only time will tell however, there is no doubt that the growth – specifically in the consumer space - of Netbooks certainly points to the fact that users are willing to sacrifice functionality for lower pricing and this may indicate where future purchasing decisions are made. It is also true that those same users demand something that is familiar and up to now Linux (even when significantly cheaper on a Netbook) has not had a significant impact on the market share of Windows.
That desire for a familiar interface does not mean that Microsoft can sit back and wait for the dollars to roll in. Unlike those in their 30’s and above (including the author) who have grown up with Microsoft, those of a more energetic demographic have not...to them Google rather than Microsoft is more familiar and more trusted and this may be the group that adopts the Google Chrome OS more rapidly.
So yes, the timing is possibly designed to irritate Microsoft but of greater implication are the partners Google is working with on the new OS. Microsoft has just released the Windows 7 code to PC manufactures and has also published the prices* for the replacement operating system. Those same manufacturers ramping up to supply hardware for Microsoft are in talks with Google - they include the likes of HP, Acer, Lenovo, Texas Instruments and Toshiba. Google, often perceived as a one product company, has a growing presence in the business sector that we should not underestimate.
If we look at the growth in market share that Google has achieved in the business space and the types of organisations that have adopted Google Applications for their businesses then the list is pretty impressive. The likes of Guardian Media Group, the Telegraph, Taylor Woodrow and Johnson Diversey have been recent converts and it seems that they have adopted Google Apps for two main reasons – achieving collaboration where companies have distributed workforces and where the cost of office applications (email, spreadsheets and word processing) is prohibitive to deploy universally. According to Google 1.75 M businesses globally use Google Apps – miniscule in comparison to those with Microsoft Office but recent product enhancements surrounding migration assistance and IT administration functionality are an indication of Google’s desire to capture more of this space in the face of declining advertising revenue.
The dilemma for Microsoft – just as it is with Windows - is that although Microsoft Office is ubiquitous the functionality in the products most used is already there and it’s difficult to convince people to upgrade. In the operating system space, the continued demand for XP is a double edged sword – does Microsoft stop support for XP and cause users to migrate to Chrome OS or, does it continue support and damage future revenue for Vista/Windows 7?
It’s a difficult balancing act and it is the OEM partners who sell PC’s with pre-installed software that probably hold the key. Having Chrome OS in their “back pockets” could be a significant ace when it comes to negotiating volume deals with Microsoft.
By comparison, the challenge for Google is that it needs to build that trusted brand status with organisations. Although we may moan about our PC crashing from time to time we have remained loyal and whereas we may be mildly irritated when our personal email account “goes down” the same may not be the case where it involves customer data. Recent outages on Gmail as well as negative publicity surrounding Google Street View have taken some of the shine off the brand that has the motto “do no evil”.
The next 18 months for both Microsoft and Google are critical – Microsoft needs to think hard about its pricing strategy for Windows 7 – it should reward loyalty perhaps by giving percentage discounts depending on how long someone has had its products. Microsoft has dabbled in SAAS and has some great technology – it just needs to do that more whole heartedly. For Google, Online storage needs to be bomb proof and 100% up time really has to be 100%. Access via the browser needs to be coupled with robust off line capabilities that are probably not there yet but will be with Chrome OS.
The end result is that it is that in the battle for dominance both will survive (albeit structurally different) while we, the consumers, will benefit.
* Prices start at £49.99 and rise to £229.99 depending on versions and purchase dates.
