Putting rest to all speculations, Google announced this week that it is developing a new operating system for personal computers, Google Chrome OS. With Chrome OS, Google launches a direct attack on 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 Chrome operating system. Taking a minimalist view, Google argues that operating software only needs to do what can’t be done externally on the web. It is promising that users will be able to fire up their computers and get on the web in a few seconds.

The rivals have spent years attacking each other, but with Chrome OS, Google makes it entry into Microsoft’s core territory, its lair. So, is it time for Bill Gates and Steve Ballmer to get worried? Not really, feel many analysts. Here’s why.

Windows in Netbooks

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. However, a 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.”

Hardware and app support

One major challenge that could delay adoption is getting makers of printers, networking gear, cameras and other devices to develop software that lets their equipment work with the new Google system. There are more than 2 million software drivers that connect devices to Windows PCs.

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.”

If enough computer manufacturers embrace the Chrome operating system, it could weaken Microsoft while opening up new avenues for Google to persuade consumers and businesses to use its suite of online applications and other Internet services, generating more opportunities for Google to sell lucrative Internet ads.

Getting consumers and businesses to switch to computers powered by a new operating system won’t be easy, as Google has learned from the introduction of Chrome.

Windows’ user base

Microsoft’s Windows operating system has been even more dominant for a longer period time despite challenges from Apple Inc and various systems based on Linux, the same type of open-source software that Google plans to use. Analysts feel that people may bitch about Windows, but they are used to it. Windows is almost habit for many. And it is tough to change habits.

“It’s going to be tough,” Standard & Poor’s equity analyst Scott Kessler said of Google’s foray into PC operating systems. “The reality is that as the importance of a device or task increases, people have a much lower inclination to consider a change.”

Businesses will be especially reluctant to abandon Windows because, on average, about 70 per cent of their applications are designed to run on that, said Gartner Inc analyst Michael Silver.

Chrome’s ‘limited’ success

The new operating system is based on a product from Google that has had limited success: the Chrome browser. As of February, it claimed 1.2 per cent market share, compared to nearly 70 per cent for Microsoft’s browser, according to researcher Net Applications.

Microsoft Bing and more…

Analysts also had a warning for Google, cautioning the company’s executives against letting their foray into the PC desktop distract them from the company’s core search and advertising business, where Microsoft is making progress.

Bing, launched June 3 to generally positive reviews, handled 8.23 per cent of US Web searches in June, up from 7.21 per cent in April, according to Internet data firm StatCounter. “They have been making all these attempts at Microsoft. They have been doing nothing with their search,” said Fred Hickey, editor of the High-Tech Strategist Newsletter.

Web as backbone

Similarly, analysts wonder if applications that could once only run on local computers will reliably work on the Web. For, as everyone knows Web has been a disruptive technology, but then it is not always reliable. Network connections can be slow, or non-existent, and any functions that require frequent connections have the possibility of letting users down.

Google has tried to work round this by allowing users to store functions offline. But it remains to be seen Web does pose risk.