Why Chrome OS Will Push Apple

Apple should be nervous about Google's move into the operating system market, some analysts said today. Others, however, argued that Apple executives won't lose a second of sleep.

"I think this is a threat," said Ezra Gottheil, an analyst with Technology Business Research and one of several who said that Apple should be concerned. "This exposes the consequences of letting a gigantic gap open between its lowest-priced notebook and cheap netbooks."

Late Tuesday, Google announced that it would launch a long-anticipated operating system, based on the Linux kernel and built around its Chrome browser. The new operating system, dubbed "Google Chrome OS," will launch sometime in the second half of 2010, officials said in a posting to a company blog.

Gottheil has chided Apple over its lack of attention to the netbook market before, but Google's promise to compete on operating systems makes Apple's sin of omission all the more apparent, he said today. "If Google delivers, and there's no reason to think they won't, then Apple is hanging out there with a MacBook for $1,000, while a Chrome OS netbook will cost maybe $250. For some buyers who choose to say, "I don't need to do everything,' Chrome OS on a small PC could be very appealing."

Nonsense, countered Michael Gartenberg, an analyst with Interpret. "This will have no impact on Apple whatsoever," said Gartenberg, who pointed out that users have already rejected Linux on the desktop as well as Linux on netbooks.

"People want to run applications, they want to run iTunes and Office," Gartenberg said. "The idea that there will be some cloud-based computer by this time next year is ludicrous. What everyone's forgetting is that whether it's Windows or Mac OS X, it's a superset of the cloud. There's nothing mystical or magical here."

Michael Silver, Gartner's operating system analyst, took Gartenberg's side in the "harm-or-help Apple" argument. "This doesn't hurt Apple," said Silver. "People looking at Macs are looking at a different overall experience than what Chrome OS will offer. Can I use iTunes on Chrome OS? Probably not."

In fact, added Silver, Google's promise that applications written for Chrome OS will be compatible with "any standards-based browser on Windows, Mac and Linux" actually adds to the Mac. "For Apple, Chrome OS isn't a bad thing, since software will run on Chrome on a Mac, or other browsers," noted Silver.

Although he sees Chrome OS as a potential threat to Apple, Gottheil also said Apple has plenty of time to make adjustments, since Google won't launch its operating system until the second half of 2010. "Apple will bring out a device, call it an 'iPad' if you want, that is in the middle, more than a netbook, less than a notebook," Gottheil said of his bet on Apple.

"They'll be happy to say, 'You can get a Chrome device,' but here's what you'll give up," Gottheil said.

Another move he thinks is mandatory for Apple is to further reduce the price of its lowest-priced MacBook, which now retails for $999. "They need to produce a $700 MacBook, one that's specced the way they specced it in 2006, so they won't be accused of putting out a piece of junk," he said, referring to CEO Steve Jobs dismissing netbooks last October as just that. "And with the new [Snow Leopard] OS, they can claim that it performs better than in 2006."

If Apple does make those moves -- adding a tablet-like device to its lineup and dropping MacBook prices, Gottheil concluded, "Then I don't think Chrome OS is much of a threat."

After all, Apple, unlike Microsoft, hasn't expressed a desire to rule the OS roost for decades. The company seems satisfied with a much smaller slice of the pie.

"Apple's never aimed at dominating the PC market," said Gottheil. "All they want is to skim the cream."

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