Google's Chrome OS and Netbooks: Why Microsoft shouldn't worry...yet

While it may not have the same buzz as a new iPhone, Google's announcement of a new computer operating system based on its Chrome Web browser, has certainly set tongues wagging across the Interwebs. It certainly has many of the hallmarks of a hot news story--the bitter fight between Microsoft and Google; the rise of low-cost, low-power computing in Netbooks; free vs. paid software.

But while we're always in favor of more consumer choice and potentially lower prices, it's not quite time for Microsoft to worry about losing its firm hold on the Netbook market.

Microsoft's Windows XP is currently on 96 percent of Netbooks sold in the U.S. by some estimates (up from less than 10 percent in early 2008). When the similar idea of Netbooks running Google's Android operating system was discussed back in April, we said:

The very first Netbooks ran Linux operating systems, usually with a custom front-end to give users easy access to a Web browser and other frequently used apps. But as well-intentioned as that plan was, it wasn't until PC makers added the already archaic Windows XP operating system that the Netbook craze took off.

It wasn't that XP was the perfect solution for small screens and low-power CPUs--it's that consumers searching for a simple, low-cost second or travel laptop value ease of use over almost anything else. XP benefits from looking and feeling familiar to most users.

What we said then is just as true now, even if the OS is called Chrome and built specifically for PCs, rather than the smartphone-based Android. That familiar look and feel is what makes Netbooks so appealing to casual computer users, kids, and seniors.

We've seen plenty of attempts from PC makers to do essentially the same thing: build an attractive, useful front-end onto Linux in a Netbook. HP's Mi Edition Mini and Asus' early Eee PCs are good examples. Both offered easy access to open-source Web browsers and office productivity suites, but moving beyond the handful of choices presented on the desktop could be daunting for those who are only familiar with Windows.

Case in point: if something like your Wi-Fi connection, for example, isn't working for some reason, even a relative Luddite can muddle through several obvious possible fixes in XP. Try getting a PC novice to figure that out under an unfamiliar operating system.

That's not to say a Google OS for Netbooks wouldn't have certain advantages. The combination of Gmail, Google Docs, and the Chrome Web browser makes for a compelling case that Google will be able to build a very usable front-end for consumers. But, by the time the first Chrome OS Netbooks are available--the second half of 2010--Microsoft's Netbook-friendly Windows 7 will have already had about a year to maintain its iron grip on the Netbook market.

What would you like to see in your next mini-laptop: Windows 7, Google Chrome, some other Linux flavor, good ol' XP, or maybe even some kind of long-rumored Apple Netbook or tablet? Sound off in the comments section below.

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Update: Adding a video clip of myself discussing Google's planned new OS on Reuters TV earlier today.