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Google CEO: Chrome OS a 'Game-Changer'

The Associated Press

SUN VALLEY, Idaho -- Google (GOOG Quote) CEO Eric Schmidt can't wait for the Internet search leader's free operating system to debut next year.

But he admits his excitement is a relatively recent phenomenon, having spent his first six years as Google's CEO trying to convince company co-founders Larry Page and Sergey Brin that developing an operating system to compete against Microsoft's (MSFT Quote) dominant Windows franchise would be a terrible idea.

Schmidt didn't think the timing was right and, worse, he didn't want Google to get into a potentially bruising battle with the world's largest software maker. His change of heart shows how far Google has come since Page and Brin started the Mountain View, Calif.-based company in a Silicon Valley garage nearly 11 years ago.

Schmidt now believes Google can withstand whatever counter punches Microsoft might throw as the company sets out to make computers cheaper to buy and more enjoyable to use with an operating system tied to Google's nine-month-old browser, Chrome.

"They are game changers," Schmidt during a 75-minute interview Thursday with a group of reporters at an exclusive media conference in the Idaho mountains.

The operating system, due out in the second half of 2010, threatens to chip away at Microsoft's market share in the low end of the PC market -- the less expensive and less powerful laptops known as "netbooks" which are becoming increasingly popular among consumers primarily interested in surfing the Web.

Both Schmidt and Page, who accompanied the CEO during the interview, sought to downplay Google's showdown with Microsoft. It's also something Microsoft Chairman Bill Gates didn't want to discuss when he was approached at the same conference by the Associated Press earlier Thursday.

But Page couldn't resist taking some veiled shots at Windows. Without mentioning Windows, he suggested Microsoft's operating system is becoming archaic as people spend more and more of their computer time in a Web browser.

"The way we think about it is if you are living your life online, maybe you don't want everything (on computers) that came from Eric's generation," Page, 36, said as he smiled at the 54-year-old Schmidt.

Page said he will consider the operating system a resounding success if people don't realize what's controlling their computers.

"You want the computer to get out of the way and just let you get your work done," he said.

Most industry observers believe it will take years before the Chrome operating system develops into a serious challenger to Microsoft's Windows, which runs on more than 1 billion PCs, according to Collins Stewart analyst Sandeep Aggarwal.

But the Chrome OS also could put Google into direct competition with Apple (AAPL Quote), a computer maker whose board includes Schmidt and another Google director, Arthur Levinson. The Federal Trade Commission already is taking a look at whether Schmidt's and Levinson's overlapping with Google and Apple threaten to diminish competition.

But Schmidt doesn't see a conflict. He said he doesn't intend to recuse himself from Apple board discussions about computer operating systems like he does when the directors talk about Apple's iPhone. Google also makes a mobile operating system called Android.

Some computer makers already are considering using Android as an operating system in netbooks, but both Page and Schmidt said they think Android is better suited for handheld devices. They also think elements of the Android and Chrome systems could eventually merge.