The Strategic Implications of Chrome OS

Excuse me for the grand title, but I’ve been writing too many marketing papers recently…

Google held a press release for Chrome OS today. All the major tech blog properties are covering it. Just check out the first page on techmeme and you’ll get a good rundown of all the discussions going on.

What I’d like to talk about is how Chrome OS might impact the computing market. Google has taken a page from Apple’s playbook by deciding that Chrome OS will be available only pre-shipped with certain devices (netbooks, at this point), as opposed to being an OS that you can get and install on whatever machine you have.

This is actually a big deal. By doing so, Google is moving away from the traditional PC hardware / software paradigm and moving towards a model more typically found in other consumer electronics – the future Chrome OS devices will be more similar to your TV or other home appliances than to your laptop or desktop, in that its feature-set is pre-defined and not customizable (unless you are a hacker). It will be a simple, straight-forward user experience – when you boot it up, all it shows will be the Chrome browser window.

Commentators are divided over the OS, but the differences really are due to very different vantage points. The infoworld article boldly titled “why Chrome OS will fail – big time” focuses on how Chrome OS is not a substitute for Windows or Mac, and thus claims it fails. Robert Scoble on the other hand focuses on how Chrome OS is really about low cost supplemental access to the web, and a competition over web standards and tools – HTML5 vs. proprietary frameworks like Flash or Silverlight.

My concern with Chrome OS is really about the bigger picture of netbooks – having never bought one myself (though quite tempted at one point when the EeePC first came out), I am still not a big believer. Netbooks are a niche category on a rapidly converging field, squeezed between ever-more powerful smartphones one the one end and laptops on the other. In one sense there’s a definite value proposition for it – a $100-200 device that you can just boot up and google a recipe while you’re cooking, or just do some casual browsing while you’re on the couch does have some marginal benefit, but the emphasis here is really on “marginal”.

For Chrome OS and netbooks to succeed, Google is really betting on a couple of big industry trends. One is that HTML5 adoption will be smooth and major web properties will convert to it, instead of running on proprietary platforms such as Adobe Flash or Microsoft Silverlight. Of course in this aspect Google does have some control, since it owns Youtube, so at least it can ensure that the biggest video site on the web will be compatible.

The second big trend is the wide-spread availability of wi-fi, since the device is Internet only. Google and its hardware partners can opt for 3G capabilities, but that’s a harder sell because of the additional telecom fees. In one sense, wi-fi is pretty widely available, but it’s far from ubiquitous, and while the device will still sell, people will talk about it less if they don’t use it on the go that conveniently. To a certain extent, this point is more of a technical issue, but Google and friends will have to come up with some solutions to make the device more usable.

In sum, Chrome OS is perhaps just the beginning of the future – a future where every device is a thin client to access the web and everything is stored in the cloud. It may be too early for its own good. Only time will tell.

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