The blogosphere’s response to Google’s announcement late yesterday about its plans to release an operating system in the second half of 2010 was swift and strong. ‘Google Drops a Nuclear Bomb’ on Microsoft crowed TechCrunch. ‘Google Launching OS, Firing Torpedo Into Microsoft (and Apple),’ announced Silicon Alley Insider.
It continues to amaze me that any twitch by Google garners such breathless press when — publicity aside — the company has never materially impacted a market other than its core online advertising market (though, to be fair, it’s had pretty monumental impact in that market!).
My own view is that there is in fact real disruptive potential in Google’s approach, with two substantial hurdles standing in the way of success.
Before we discuss the hurdles, however, let’s look at the disruptive potential. Google’s introduction of the Chrome Internet browser last year heralded a more direct assault by Google on Microsoft’s core applications and operation systems businesses. While that browser hasn’t had huge market impact, it allowed Google to learn more about application development.
Chrome OS could continue Google’s disruptive march. Google is smartly targeting the emerging netbook market. Netbook users don’t want all of the features packed into operating systems created for more powerful laptops or desktops. Google is betting that it can optimize its operating system for the unique demands of netbook users.
Also, while Microsoft has made public proclamations about the strategic importance of the netbook market, it’s always harder for companies to prioritize smaller, less profitable markets. Google’s approach of starting simply and moving up-market is right out of the disruptive playbook.
What’s in it for Google? As always, the easier Google makes it for people to browse the Internet, the more it can grow its core advertising business. Plus it makes strategic sense for Google to distract Microsoft from its widely publicized — and increasingly successful — efforts to crack into the search market.
Now, about those hurdles.
First, Google has to demonstrate that it can go from merely flinging ‘good enough’ products into emerging categories to actually building viable businesses. Henry Blodget from Silicon Alley Insider appropriately termed some of Google’s past efforts ‘science projects.’ Remember, more than 95 percent of Google’s revenues come from its core advertising offering.
Second, Microsoft isn’t going to sit idly by and let Google disrupt its core business. The company has proven to be a fierce competitor in established markets. And it does have its own promising new operating system (Series 7) coming out this fall.
How real are those hurdles? To its credit, Google has acknowledged that it needs to bring greater discipline to its innovation process. The Chrome OS initiative will be a great test of whether the company is able to focus its resources to realize its still-untapped innovation potential. And early signs suggest that Microsoft needs to adjust its netbook strategy, moving from the defensive strategy it appears to be taking today (designed to insulate its core business) to a more offensive approach.
My hunch is that Chrome OS is going to be less of a torpedo and more of a nagging irritant, as there’s a reasonable chance that Microsoft will do a good enough job in the netbook market to stave off disruption and that Google will revert to its old ways.