Google operating system challenges Microsoft

SUN VALLEY, Idaho — Google Inc. is hoping to gain greater control over how personal computers work by developing a free operating system that will attack Microsoft Corp.'s golden goose — its long-dominant Windows franchise.

The new operating system will be based on Google's 9-month-old Web browser, Chrome. Google intends to rely on help from the community of open-source programmers to develop the Chrome operating system, which is expected to begin running computers in the second half of 2010.

The early versions of the Chrome operating system will be tailored for "netbooks," a breed of low-cost, less powerful laptop computers that are becoming increasingly popular among budget-conscious consumers primarily interested in surfing the Web.

That is a direct challenge to Microsoft, whose next operating system, Windows 7, is being geared for netbooks as well as larger computers.

The vast majority of netbooks already run on Windows, and that is unlikely to change unless Google can demonstrate the Chrome operating system is a significant improvement, said Forrester Research analyst Paul Jackson. He pointed out that many customers had returned the original netbooks that used open-source alternatives to Windows.

"It was not what people expected," he said. "People wanted Windows because they knew how to use it and knew how applications worked."

Google struck a confident tone in a blog posting late Tuesday night announcing its operating system. The company, based in Mountain View, Calif., believes it can streamline the operating system to improve speed and reduce security threats.

"We hear a lot from our users and their message is clear — computers need to get better," wrote Sundar Pichai, Google's vice president of product management, and Linus Upson, Google's engineering director.

Microsoft hadn't responded to requests for comment through Wednesday.

Investors seemed to be betting on Google on Wednesday as its shares rose $5.86, or 1.5 percent, to close at $402.49. Shares in Microsoft, based in Redmond, Wash., inched up 3 cents to $22.56.

The success of the Chrome operating system will likely hinge on its acceptance among computer manufacturers that have been loyal Windows customers for years, said Matt Rosoff, an analyst for the research group Directions on Microsoft.

"Most people, when they get a new operating system, they get it with their PC," he said. "I don't think most people think much about their operating systems."