Google sees a window of opportunity to launch its own operating system

And this year, Microsoft plans to unveil a stripped-down operating system aimed at netbooks -- small, low-cost laptops that cost as little as $200 and have been adopted by business travelers and consumers alike who want to check e-mail, surf the Web or watch online videos. That could blunt Google's move into operating systems, said Scott Kessler, an information technology analyst at Standard & Poor's Equity Research.

Google said its operating system is designed with netbooks in mind. It also said it would allow outside developers to freely modify the software for their own uses, suggesting that it would give away the operating system.

Microsoft charges about $200 for a copy of Windows Vista at retail stores. It also licenses the software at a discount to computer makers such as Hewlett-Packard, Dell and Toshiba.

But as computer prices plummet, the cost of the operating system becomes a bigger issue, and one that Google no doubt hopes to exploit, analysts said.

"The operating system is the single most expensive item in a laptop," Doherty said. "When you have companies talking about $99 laptops, Microsoft would need to do a lot more discounting to compete. Especially when they're competing with free."

Although Google's move takes aim at all existing operating systems, including Apple Inc.'s OS X Snow Leopard, it's less likely to affect Apple's Mac users, who are willing to pay a premium for a more polished experience. With laptop prices starting at $999, Apple has eschewed the low-end netbook market, at which Google is targeting its operating system.

Instead, Google's new software could be more damaging to Microsoft, which helped spur the mass adoption of personal computers in the 1980s and 1990s. Its MS-DOS and then Windows operating systems helped make PCs more accessible to ordinary users.

Now, the Redmond, Wash., giant is being threatened by another democratizing force -- the Internet.

By relying on faraway data centers and computer servers to do the heavy lifting, users won't need powerful, expensive PCs. The concept, called cloud computing, has long been a focus for Google Chief Executive Eric Schmidt, who devoted his doctoral dissertation at UC Berkeley to the topic.

"What is driving all of this is a desire to reduce complexity and cost," said Andy Bechtolsheim, one of the original investors in Google and co-founder of Arista Networks, a Silicon Valley cloud computing start-up.

"It seems very likely that within the next five years, most mission-critical applications . . . can be accessed by any browser-capable device, including your cellphone."

Still, Google's success in loosening Microsoft's grip on the PC market is hardly a foregone conclusion.

Despite Google's vaunted stock price and perception as a model for a "new" economy, Microsoft is actually a bigger and better-capitalized company, Martin said. And Microsoft isn't afraid to attack Google on its home turf, as it showed with its introduction of Bing two months ago.

Meanwhile many of Google's new products "have not caught on," said Ben Schachter, an analyst with Broadpoint AmTech.

"They've released a plethora of products. Many of them have withered on the vine. The ones that have caught on are the ones that are so much better."

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alex.pham@latimes.com

jerry.hirsch@latimes.com