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Google: Chrome OS Is About Driving Internet Use (Which Will Let Us Show More Ads)

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52214v1-max-150x150During Google’s (s goog) quarterly earnings call today, a number of analysts asked questions about the company’s new Chrome OS. The product is unique in that it’s generated a massive amount of hype and coverage without anyone having any idea what it will look like, when it will arrive, or what users will be able to do with it. Much like Google Wave, the company hopes it can tout the Chrome OS with words, rather than by having to actually show anything. One thing is for sure, Chrome OS won’t be making Google any money. Not directly, anyway.

Google CEO Eric Schmidt, responding to an analyst’s question about monetizing Chrome OS:

Because it’s open source, we do not plan to charge for it, in an open source form. There may be other ways we can make money from it. The core operating system, if you look at the blog post, we said it was an open source project and it should be available for anyone else to use. We do this with a lot of products. For example our Android product… There are many other pieces of technology that Google builds [that we don’t charge for].

The rough argument is we do things that are strategic because they get people to ultimately use the Internet in a clever and new way. We know that if they use the Internet more, they search more, watch more on YouTube, and we then know that our advertising [will reach them]. We do not require each and every project to be completely profitable or not profitable — we look at them in a strategic context: are they making the Web a better place? By making the web a better place, by getting more and more people online — especially on broadband connections — we have lot of data that says this results in very, very strong revenue growth from us because of targeted ads that we offer.

When asked for more concrete details on the Chrome OS, Schmidt had this to say:

What we talked about when we did the announcement a week ago was that, we are going to build an open source version of Chrome OS that would be available to the PC community a year from now. We are, in fact, talking to PC hardware manufacturers of both architectures, both ARM and Intel (s intc), to design products that are very, very exciting, that really fulfill the vision of cloud computing. Other aspects of our strategy are still to be worked out, based on feedback.

There will be a reference hardware spec with appropriate features and so forth. Our primary focus for that product will be speed — in particular speed of boot and speed of computation, and seamless use of all the web services that are the promise of cloud computing. Will the software be generally available for download? Will it run on existing hardware? Those things we will work out. Because it’s open source, we won’t have the kind of restrictions that other people have. It will be possible people to take it and do whatever they want to it; that’s kind of the beauty of the Chrome OS.

Here, let me sum that up for you: Open source! Very Exciting! Fulfill the vision of cloud computing! Open Source! Thanks so much Eric. Very enlightening. Everyone follow that? Google Chrome OS, when it gets here, whenever that is, will change everything.

20 Responses to “Google: Chrome OS Is About Driving Internet Use (Which Will Let Us Show More Ads)”

  1. Yuvamani

    To quote Fake Steve Jobs –

    Point six: It’s going to be free. So what’s the point? I mean I understand the idea of a loss leader. We don’t charge for iTunes. You’ll notice, however, that we do charge money for music and hardware. But how does this concept apply to Chrome OS? Somehow if you put out a new operating system you’ll get more people using the Internet and then you’ll be able to sell more of those little ads? Forgive me if I’m missing something here, but I don’t see how a free OS or a free browser helps Google. To put it another way, have you ever met anyone who said they’d really like to try out that Interwebs thing, but they’re just put off by the low-quality operating systems and browsers that are available at this time, so they’re sitting it out for now? Or like maybe they’re on the Internet now but they would just be soooo inclined to spend soooo much more time on the Web, and they’d be soooo much more likely to actually click on the ads, if the OS and browser made it somehow less onerous to, um, type in a URL and go to a page?

  2. Interesting interpretation, Jordan. Is it your strategy to drive comment traffic through controversial postings? (Schedule a lunch with Stacy – she’s the best writer on the site, and no controversy).

    Clearly Google wants to maintain/extend their significant ad revenue stream. They are no angels to be sure, but everyone seems to want to project world-domination, must-kill-Microsoft intentions onto them. I like the fact that their projects benefit the consumer, and better the overall marketplace. Chrome (browser) helps drive the fast javascript environment; Android is helping to keep all of the smartphone os vendors on their toes, and so on. I don’t have to choose a Google product to benefit from that competition.

    Will Chrome OS slay desktop windows? No. Are netbooks still overwhelmingly equipped with XP? Yes. But the margins are too small on netbooks and their future peers to charge much of anything for the OS. I’d be happy to run “Windows 7 Netbook edition” if it existed on one — but what has MS won if they give up their entire margin to keep that market share?

  3. whether of not this easily install on existing and even older hardware could be a big issue toward adaptation. a lot of people buy second hand computers; many of these are used almost exclusively for the web. the new owners are often very frustrated trying to clean up an old(and often pirated) windows on there machine. if they could simply install chrome OS and be done with it than this may actually take off first on older computers. sure these people could be installing linux now; but it can be a daunting task full of complexity and the fragmented nature of all the distro’s does not give the impression of a solid foundation.

    i really could see chrome OS take over this segment of the market that is currently dominated by mostly pirated/hacked windows XP.

  4. Google strategy is clear, you PC will become a terminal to the cloud processing and storage. The thing that scares me is that the OS knows every move or transaction you make, and Google can use it to direct ads to you.

  5. HereAndNow

    ChromeOS is likely to stimulate an explosive race to the cloud for applications that currently run on the desktop.


    If a user’s device is only capable of running web apps & your web app isn’t available, they’ll use your competitor’s web app. And, if enough people start using & liking your competitor’s web app, they may find little reason to use your web app if/when you make it available.

    One of the major benefits of moving to web apps is that, without any porting effort, HTML5/JavaScript/CSS-based apps will run on:

    – any OS (Windows, OS X, Ubuntu, ChromeOS, Android, …).
    – any device type (smartphones, netbooks, notebooks, desktops, eReaders, photo frames, carputers, …).
    – any CPU architecture (x86, ARM, MIPS, …).


    – web app improvements or bug fixes can be propagated to millions of users instantaneously.
    – web apps can be offered for free/sale/subscription, to any user located anywhere in the world.

    VERY exciting!

    • “Thanks so much Eric. Very enlightening. Everyone follow that? Google Chrome OS, when it gets here, whenever that is, will change everything.”

      Why so pissed off? There’s nothing evasive about what Schmidt said. It seems pretty simple: it’s an OS designed to boot fast and get people on the web. It’ll get here next year. Where does he say it will change everything?

  6. “Much like Google Wave, the company hopes it can tout the Chrome OS with words, rather than by having to actually show anything.”

    Guess someone missed the 1-hour Google Wave show and tell, which received standing ovation, which was recorded on video and posted on Youtube, and viewed by thousands of people all over the world.