Why Microsoft shouldn

While Google Inc.’s newly announced Chrome OS will pose some new challenges to Microsoft Corp. and its Windows platform, it isn’t panic time yet for Ballmer and company, according to industry analysts.

The search giant shocked the tech industry earlier this week with the announcement of a Linux-based OS, leading many pundits to pit the open source Chrome as a major threat against Microsoft’s Windows OS.

On its official blog, Google said that while the OS would be targeted at netbooks initially, the goal is to change the way all desktops function. The OS will be lightweight, with a minimal user interface, designed to boot up almost instantly and get users up onto the Web in just seconds.

“This is a very similar thing to what Microsoft did to the IT space when they brought out DOS and Windows,” said Rob Enderle, principal analyst at San Jose, Calif.-based The Enderle Group. “This platform not only looks at the world today, but it anticipates the cloud and everything that goes with it.”

Additionally, the timing of the announcement hits Microsoft in the midst of an operating system slump, Enderle said, with the company suffering the failure of its Vista OS and a continually struggling shrinking Internet Explorer user base.

But even without the momentum, Microsoft greatest asset is its rival’s biggest weakness.

“Chrome is fairly far removed from Google’s core competency, so there’s the problem of stretching too far,” Enderle said. “They’re starting to go in an awful lot of directions at one, very much like AT&T and Chrysler.”

To get people to switch operating systems — especially enterprise users — Google will need a lot of marketing strength, he added, which is something the company has failed to demonstrate.

“Google’s marketing is all but non-existent and their PR is probably the worst in the Valley,” Enderle said. “They’re going to have to fix that if they’re going to make this stick. They can’t go after Microsoft in the same way Microsoft tried to defend Apple’s push, which was simply to ignore marketing and hope technology carries them through.”

For David Cousey, a San Mateo, Calif.-based technology blogger and consultant, while Chrome will definitely show up on the radar at Microsoft’s Redmond, Wash., headquarters, the new OS already has a lot of strikes working against it. These include Linux’s historical inability to catch on in the OS market and Google’s narrowly focused play at the netbook space.

“Google could dominate netbook operating systems, generate no revenue from it and nobody will care,” he said. “The issue is also going to be what they can sell to users.”

Specifically in the enterprise space, Cousey said, unless Google finds a way to either run Windows applications or convince a whole lot of people who build and use Windows apps to support Chrome, the OS will struggle to find any take-up.

“People forget that Google has not had a huge success outside of its core business. Android hasn’t exactly set the smart phone world on fire and some of Google’s forays into broadcasting haven’t done well either,” he added.

Of course, none of this means that Microsoft should simply wait for Chrome to hit the market and just cheer against it.

What Microsoft will have to do, according to Enderle, is heed the warnings it has already been receiving from both IE and Vista customers — as well as the European Union and its order for the company to separate its browser from the OS.

“They’re clearly going to be forced to relook at the operating system probably as a low-cost way to connect applications to hardware, as opposed to the application approach they’ve been taking,” he said. “Google’s Chrome is yet one more warning.”

Cousey’s course of action is a little different, proposing that Microsoft release its Windows 7 for netbooks as free software for one year. “It will have them battling Chrome before Chrome even ships.”

For other industry watchers, Google’s announcement represents more of an evolution to the application delivery platform than it does to the OS world.

According to Tim Hickernell, associate senior research analyst at London, Ont.-based Info-Tech Research Group Ltd., Google’s move is an “evolution step to raise the application delivery platform a little higher to include more utility resources than one would normally associate with an operating system.”

Hickernell added that while Chrome platform could up the ante for the delivery and support of future applications and cutting edge Web 2.0-based apps, it has more in common with products such as Microsoft’s Silverlight and Adobe Inc.’s AIR platform.

“I’m not getting too excited over this huge war with Microsoft because I think many folks are focusing on the wrong thing,” he said. “It’s really about the delivery of newer, Ajax-like Web 2.0 applications as we get more into mashups and applications that draw services from everywhere.”

With the Chrome browser launch nine months ago, Google chose to use the Web browser metaphor and now they are choosing to use the operating system instead, Hickernell added.

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