Google Inc plans to attack Microsoft Corp's core business by taking on the software giant's globally dominant Windows operating system for personal computers.

Google, which already offers a suite of e-mail, Web and other software products that compete with Microsoft, said it would launch a new, free operating system that will initially be targeted at netbooks.

Called the Google Chrome Operating System, the new software will be in netbooks for consumers in the second half of 2010, Google said in a blog post, adding that it was working with multiple manufacturers.

Netbooks are low-cost notebook PCs designed for Internet surfing and other Web-based applications.

It's been part of their culture to go after and remove Microsoft as a major holder of technology, and this is part of their strategy to do it, said Rob Enderle, principal analyst at Enderle Group. This could be very disruptive. If they can execute, Microsoft is vulnerable to an attack like this, and they know it, he said.

Google and Microsoft have locked horns over the years in a variety of markets, from Internet search to mobile software. It remains to be seen if Google can take market share away from Microsoft on its home turf, with Windows currently installed in more than 90 percent of the world's PCs.

Key to success will be whether Google can lock in partnerships with PC makers, which currently offer Windows on most of their product lines.

Google said in a blog post on Wednesday that it is working with a number of PC makers including Hewlett-Packard, Acer, Lenovo and Asustek, as well as chipmakers Texas Instruments and Qualcomm to design and build Chrome devices.

The news comes as executives from the world's biggest technology and media companies, including Google and Microsoft, gather in Sun Valley, Idaho for an annual conference organized by boutique investment bank Allen & Co.

A spokesman for Microsoft declined to comment.

Microsoft shares rose 3 cents to close at $22.56 on the Nasdaq. Google shares rose 1.5 percent to $402.49.

FAST AND LIGHTWEIGHT

The new Chrome OS is expected to work well with many of the company's popular software applications, such as Gmail, Google Calendar and Google Maps.

It will be fast and less memory-intensive, enabling users to access the Web in a few seconds, Google said. The new operating system is based on open-source Linux code, which allows third-party developers to design compatible applications.

The operating systems that browsers run on were designed in an era where there was no web, Sundar Pichai, vice president of product management at Google, said in the blog post. The Chrome operating system is our attempt to rethink

what operating systems should be.

Google said the operating system was a new project, separate from its Android mobile operating software found in some smartphones.

The new system is designed to work with ARM and Intel Corp's x86 chip platforms, the main chip architectures in use in the market. Microsoft has previously said it would not support PCs running on ARM chips, allowing Google an opportunity to infiltrate that segment.

Charlene Li, partner at Altimeter Group, said Google's new system could first appeal to consumers looking for a netbook-like device for Web surfing, rather than people who use desktop PCs for gaming or high-powered applications.

But eventually, the operating system has the potential to scale up to larger, more powerful PCs, especially if it proves to run faster than Windows, she said.

Google said the new OS would be free to use. Enderle noted that the company's business model has been to earn revenue from connecting applications or advertising.

Microsoft declines to say how much it charges PC brands for Windows, but most analysts estimate about $20 for the older XP system and at least $150 for the current Vista system.

Altimeter's Li added: A benefit to the consumer is that the cost saving is passed on, not having to pay for an OS. It's clearly positioned as a shot across the bow of Microsoft.

(Additional reporting by Kelvin Soh in Taipei, Jim Finkle in Boston, Gabriel Madway and Edwin Chan in San Francisco; Writing by Tiffany Wu, editing by Will Waterman and Derek Caney)

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