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Wednesday, December 15, 2010

CHART OF THE DAY: Here's The REAL Reason That Google Is Making Chrome OS (GOOG, MSFT)

CHART OF THE DAY: Here's The REAL Reason That Google Is Making Chrome OS (GOOG, MSFT): "

Why is Google making Chrome OS, an operating system for PCs?

In part, perhaps, to boost Google search queries or Google web apps or Google-something-else. In part, perhaps, as a novel pet project -- because Google's founders think it's cool to do a little bit of everything. In part, perhaps, to give people a more modern PC experience for less money.

But the REAL reason is that it's a big chance to disrupt Google's archrival Microsoft, and to start to destroy its core business, Windows.

Despite all the things that Microsoft is involved in -- servers, Office, gaming, MSN, Xbox, Zune, phones -- Windows is still by far its biggest profit driver. During the last eight quarters, Microsoft's Windows division represented 51% of the company's operating income, including as much as 63% in an individual quarter.

By attacking Microsoft's core business with Chrome OS, Google is taking a small risk that could have a major payoff. Because the weaker Windows is, the weaker Microsoft is, and the less it can afford to try to attack Google. (Similarly, this is why Microsoft continues to dump money into Bing; to try to destroy Google's core search business.)

Now the question is whether Chrome OS will last, or whether it's a huge waste of time -- and that Google's attack on Windows would be stronger via a unified push behind Android.

SAI chart Windows operating income

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