Google Chrome OS: Will David overcome Goliath?

Fri 10 July 2009 by Thejaswi Puthraya

A lot has been said and written about the Google Chrome OS even before it has released. Wow!!! Funnily, a majority of the commentators are touting it as a "Windows Killer". Some are quite surprised by Google's decision to release an OS! I guess even an average computer user would have been predicting this for quite some time now.

My take is that in the longer run, Chrome OS might nibble into Windows' declining share but I doubt if it is going to get rid of Windows within the next decade as predicted by a handful of "experts". Before you start waving your hand in disagreement, let me make my case.

I collected Microsoft's annual revenues and various analyst views on their forecasts on the topic and studied them. Most sounded fairly dismissive of a major impact to Microsoft's client business from Chrome OS.

Here are the annual revenues for your interpretation:

Sales							Income							Operating Profit
03	04	05	06	07	08	09	03	04	05	06	07	08	09	03	04	05	06	07	08	09
32187	36835	39788	44262	51122	60420	59838	7531	8168	12254	12599	14065	17681	15159	13353	14867	14561	16472	18524	22491	21013

Two points to note from the above data are:

Though the Client Business which accounts for only 25% of the Microsoft's profits seems to be slowly affected by other alternatives (like Linux), the revenue from this division is gradually increasing because of support revenue from enterprises.
The forecast for 2009 is very conservative and can be revised upwards if Windows 7 clicks.

So if you are a Microsoft fanboy, you can assure yourself that the current situation isn't going to change overnight.

Why does Google want to diversify from search?

That's a good question. I doubt if Google can monetize the Chrome OS but I believe in the long term it gives access to the desktop should Microsoft tightly integrate Bing into their OS. Their aim would be for the ad-revenues obtained from accessing Google services. The move to diversify away from the core business is quite risky and might not go down well with the investors.

Another point to note is timing of their announcement. I can think of two reasons why this is significant:

With Windows 7 close to a release, I believe the folks at Mountain View are sending out a message to hardware vendors and OEMs to reconsider an alliance with Microsoft.
Diverting attention away from Bing, as it has been receiving rave reviews.

Where does Chrome OS fit?

The segment where Chrome OS would have maximum impact is ARM-powered netbooks. On the other hand, it would have the least penetration on the enterprise side.

Who is likely to migrate to Chrome OS?

Netbook buyers towards end of 2010
Google fanboys. Oh boy!!! There are a lot of them
People who don't care about the UI of an OS. All they love using is facebook or twitter. These people wouldn't even care for the browser they use (and most sadly use IE6). They would be attracted to the low cost of the netbooks and might migrate.

Who's not going to migrate to Chrome OS?

Enterprises.
People not comfortable with having their data on the cloud.
High-end users. These folks usually use Photoshop, Flash, Matlab etc.
Folks from countries where an internet connection is still not very usable.

My time for a prediction

Almost everyone's made one...why should I be left behind?

Chrome OS validates the Linux kernel hackers efforts of porting the OS to as many architectures as possible. Probably 2011 might be the so far elusive year of "The Linux Desktop".

Chrome OS is going to have a limited impact in the desktop market too. Why live in the browser when Moore's law is at work? It might gain a 10% market share in 5 years and around 40% in the netbook market for the same period. I am projecting a high number in the netbook market because hardware vendors might release lots of ARM powered netbooks and Windows stands no chance in this segment.

So is Microsoft going to keep quite? Probably not, but they are definitely not going to panic. They have a large userbase and can adopt the "Wait and Watch" policy. If they believe Chrome OS will be a hit, they'll have a similar offering.

Surprisingly, not many people have talked about how Chrome OS affects either Apple or the Linux Desktop community.

I think there's something cooking in Apple. Lots of rumours are indicating they are probably designing a chip for a netbook or an MID? We'll have to wait for an announcement from Apple. The Linux community on the other hand wouldn't be adversely affected because Chrome OS gets added to the zillions of distributions and the users are most likely to be displaced from a few distros to Chrome. So it's bad news for some distros but good news for the Linux Desktop community as a whole.

Google has open-sourced the effort like Android but it has to been seen how transparent the process of making and deploying apps is. The community's reaction and marketing the concept to hardware vendors will be the key to Chrome OS' success.

Has to be seen if Windows ecosystem or Google's brand win eventually!