In the mid-1990s, when Microsoft ruled the tech world, and its then-erstwhile competitors struggled to gain entry into both new and existing markets, few foresaw a day when that domination would end. In retrospect, this was a mistake, as the tech industry has been nothing but volatile over its short history. In the early-to-mid, 1990s, Commodore sold more personal computers than any other company, and that firm and most of its technology no longer even exists. IBM, of course, consolidated the PC industry under a single, semi-open standard, but then sold off its PC business and now competes in a slower-moving but still lucrative tech services market. The third dominant player in the PC industry, of course, was Microsoft, which wrested control of the market from IBM by controlling the software, rather than the hardware, that makes the whole thing work.

So what kind of company could succeed Microsoft? Well, the PC industry is ever-evolving, and the current market movements are towards mobility and cloud services. Here, two obvious players emerge, Apple and Google. Apple has undergone its own evolution from a niche PC player to a mobile computing juggernaught, and between its iPhone, iPods, iPads, and mobile Macs, the company has establexperiished itself as a serious alternative to Microsoft in existing markets and as the dominant player in new markets.

Google, meanwhile, is perhaps even more dangerous to Microsoft. That's because Google seeks to offer alternatives to Microsoft solutions across the board, and unlike most other competitors, it has the money to make it happen. Google started off slow, but quickly made inroads into every conceivable market in which Microsoft plays, a series of moves so aggressive and so unexpected that the software giant is still in many ways trying to figure out what happened, let alone how to respond.

The most amazing of these Google initiatives, of course, is Chrome OS, a version of Google's web browser that is literally an operating system in its own right, and thus a competitor to Windows. When Google first announced Chrome OS last year--see my article Google Chrome OS Preview for more information--it was positioned as a netbook-class OS, one that would run on the low-end and inexpensive netbook computers that were, a year ago, all the rage. Something not so subtle has changed since then. At last week's Chrome OS update, Google provided an important update about its PC operating system ambitions, and while the company did effectively delay Chrome OS from late 2010 to mid-2011, the overreaching message should be triggering some concerns meetings in Redmond. Chrome OS is no longer seen as an OS for low-end netbooks, though PC makers will of course ship such devices. Now, Google is positioning Chrome OS as no less than a full-fledged replacement for Windows.

This is serious.

It's serious because Google has watched the market evolve and what it sees--and I do feel that this is accurate--is that "people live within the \\[web\\] browser and use the web most the time." The company also notes that it's very hard to point to a single major new traditional, native Windows (or Mac) application that's been developed from scratch since about 2004. All the major new work, it says, is happening on the web. (It should be noted that there is plenty of native application development occurring today, but it's happening on mobile devices, mostly based on Google's Android OS and on Apple's iOS, which runs the iPhone, iPad, and iPod touch, and not on the PC. But what Google is talking about here is on the PC. In other words, on the PC, most new major application development over the past several years has all been on web apps.)

PCs are too complex. One of the notions I've been pushing recently on the Microsoft side is that Windows needs to evolve into a simpler (and smaller and faster) core system that consists only of modern, managed (i.e. ".NET") code. Legacy subsystems should be implemented using virtualization technologies based on Hyper-V, which currently appears only in Microsoft's server OSes, and should only be instantiated when legacy code is needed. This would result in a new, modern version of Windows that requires far less updating, and is far more secure. It would also allow Microsoft to offer solutions that can compete with Apple's iOS and Google's Android and Chrome OS.

Google's approach on the PC desktop, of course, is brand new because the company has no legacy technologies to contend with, no backwards compatibility concerns stopping it from evolving its platform quickly, and no hundreds of millions of customers with varied and often contradictory requirements. It is a company born in the Internet Age, and it sees everything through the lenses of the web, which has both benefits and negatives.

Starting over, with a new platform, is hard. Any Windows Phone user can tell you that, since new platforms tend to exclude the thousands of tiny niceties that users of old systems expect. But any Windows Phone user can also tell you that new platforms are also wonderful, fresh, and exciting, and devoid of legacy deadwood. What Google is offering with Chrome OS then, is similar to what Microsoft is offering in the mobile space with Windows Phone 7: A system that is clean, small, and fast, but easy to criticize because of "obvious" missing features. Both will evolve or time, of course, and fill in the gaps. But this is the tradeoff with something new.

My position here, I hope, is well understood. Starting over is cathartic and healthy. Windows has sat still for far too long, and has some impressive competitors nipping away at it from the outside. If Microsoft doesn't learn from the lessons of the past, it will become the next IBM. And one of the companies that may make that happen is, of course, Google.

So what did Google reveal around Chrome OS last week? What's new and different from the last time the company had a major event around this fledgling desktop OS contender?

Chrome OS is eliminating the need for Windows. As is the case with Apple's ever-expanding stable of iOS-based devices, Google foresees a world in which users--not technical users, but all users, including very average people with no technical skills at all--can do what they want to do, online, without having to deal with the complexity of Windows. Say what you will, but this is a compelling message, and Chrome OS is not being positioned anymore as an OS for "companion" devices, but rather as one that will power a wide range of computing devices, just like Windows.

This strategy is insidious, and really is being paralleled by Apple with iOS. That's because both companies are starting from the same assumption, that today, by and large, most of their customers are using Windows-based PCs. So they are releasing software that runs on that platform (the Chrome web browser, for example, or iTunes) that lets users move into this new world slowly. As users have good experiences with these new companies' products, they'll be far more likely to consider moving up the product chain. In Apple's case, this means from iPods to iPhones to iPads and even to Macs. For Google, it's from web applications like Gmail, to the company's browser, and then to Android phones and Chrome OS-based computers. They are identical strategies, with identical end games: When all is said and done, users will have no need or use for Windows, not to mention other Microsoft products.

For Google in particular, the ability of Chrome on Windows to mimic the way Chrome OS works, and to provide a sync capability so that moving from Windows with Chrome to Chrome OS is seamless and essentially identical, well, its genius. The underlying sync capability has been available in Chrome on Windows for months, and it's a handy enough feature for those of us with multiple PCs who want the same extensions and bookmarks on each PC. It will be even handier for those who make the Chrome OS switch.

Simple end-to-end experiences. Back in the Windows XP days, Microsoft starting talking up "end to end experiences," where the OS would help users perform certain multi-stage tasks--like importing pictures from a camera and then finding, viewing, and editing them--in ways that were both discoverable and useful. There were many false starts over in Redmond around these experiences (remember, "XP" supposedly stood for "eXPerience"), including the Activity Centers that never saw the light of day, the web-based UIs, and the Longhorn stuff in particular, but if you look at a Windows PC today, the basic usage experiences are all exactly the same as they were a decade ago.

Today, Google is also talking up end-to-end experiences in Chrome OS. This time around, the focus is on simplicity and speed. The out of box experience has just a few simple steps, and anyone who's purchased a new PC can tell you that the experience of setting up a Windows-based PC is generally a nightmarish one, and nothing like the simple Chrome OS set up, or as Google calls it, "from 0 to done in less than 60 seconds."

This process is something that will get even better over time. Today, for example, I'd never choose Google's web-based Google Docs solutions over Microsoft Office. But as Google Docs--and competing solutions like Microsoft's web-based Office Web Apps--get more sophisticated, that will no longer be the case. By logging on to a Chrome OS-based PC, I gain access to all of my configured web apps, including Google Docs (and, potentially, Office) automatically. So unlike traditional versions of Office, these web-based offerings don't need to be installed, but they also don't need to be updated or configured with my custom settings. Just log on and it's all there.

It's not just this initial setup that's better, though I should note that it often takes me the better part of a day to take an existing PC, wipe it out, and reinstall all of my apps and data. It's day-to-day performance, around things like sleep and resume, which on Chrome OS are near instantaneous. It's about ongoing, behind-the-scenes updating of all software components, whether they're on the device itself or out in the cloud, all without any user intervention. It's about having the same experience, on any device to which you logon, without having to do any work at all. Sharing PCs or using public PCs is suddenly the simplest thing in the world.

Folks, this is a revolution. No, it's not complete right now, at this moment, mostly because of the immaturity of some of the web app solutions. But it's only a matter of time. And a lot of what we really do use every day is already there. You can see the finish line.

Connectivity is integral to the experience. While the open nature of Chrome OS makes it inconceivable that every single Chrome OS-based device will have 3G or LTE cellular connectivity in addition to 802.11n-based wireless, Google has engineered the system so that it can seamlessly move between these network types when available and be used in offline mode when not. This is an important consideration for a system that lives largely in the cloud, especially for those cases in which the data you're accessing is online.

This is an area in Windows has the short-term advantage because Windows apps, of course, are generally designed almost exclusively for offline use. But if you accept the fact that more and more people are moving to a largely web-based existence, as I do, then offline usage capabilities become a central requirement. Indeed, in Google's view--as in mine--computers just aren't that useful--or interesting--when they're not connected. But Chrome OS is designed to work both online and off, and to sync offline-created data back to the cloud automatically when you're reconnected.

Google showed off an HTML 5 game running in offline mode, and the New York Times app, and of course Google's productivity solutions--Gmail, Google Calendar, Google Docs, are being rearchitected now to work in this way as well.

To push the connectivity angle, Google says that every Chrome OS-based notebook will ship with cellular-based wireless capabilities, and it has partnered with the "leading wireless carrier in the US," Verizon Wireless, to offer customers seamless connectivity in every Chrome OS notebook. This includes 100 MB of free data access every month for two years, no contracts, pay-as-you-go data plans that start at just $10, and no activation, overage, or cancellation fees. That's exciting, if you live in the US, but I think similar deals are coming around the globe. Imagine getting free data on a PC. Keep imagining.

Covering (some of) the traditional use cases. Google is even working on a solution for printing, another standard complaint from the Luddite crowd. Called Google Cloud Print, this capability lets you print from a Chrome OS-based device to "any printer connected to your network," and it will work from no matter where you are in the world as long as you're connected. At the event last week, Google showed off a scenario in which the user could connect to 3G and print a document to their home printer while riding in a taxi on the way home.

What we didn't see, however, was a solution for media access, including music and video playback. I suspect this is coming, and like any other situation in which it's hard to imagine doing things that today require gigabytes of local storage in the cloud, it's something that will evolve over time. But if you've been carting around a meticulously maintained media collection, Chrome OS isn't the system for you, at least not yet. But then maybe it's time we started asking ourselves why we're doing that in the first place.

Consider the following example. I happen to be one of those people who maintains a media collection, and I copy it to new PC installs and sync it with devices like portable media players (Zunes, iPods, etc.) and phones (Windows Phone, iPhone) so I can enjoy it on the go. Every year, Christmas comes around, and I copy over a folder of ripped Christmas CDs so we can enjoy that music around the holidays. And then Christmas ends and I eventually think to remove it all.

This year, I didn't bother. Thanks to music services like Pandora and last.FM, my family has been able to enjoy Christmas music around the house on a variety of devices. And it's been far more enjoyable because it's not the same several CDs we've always listened to. This, I feel, is one model for the future of media consumption. And for those that simply must have their own personal collections, I suspect that housing them online will become commonplace. Even more commonplace will be the ability to create and maintain playlists of music that, like other data, as saved to your Google account and derive their contents from a variety of online services automatically. You know they're working on it.

Security is core, and doesn't require user intervention. Because of its legacy underpinnings, Windows (and Mac OS X for that matter) is a security sieve that needs to be patched again and again and again, and any computer user will tell you of the hours they've wasted installing patches and rebooting. Google calls this "security as an afterthought," which is a bit misleading and more than a bit condescending. I think it's just the necessary side-effect of using systems that were architected before pervasive electronic attacks were even possible.

But then Chrome OS does have the advantage here of being new and being created with these threats in mind. And Google is right when it says that you, the user, are ultimately responsible for keeping your PC clean and clear of threats. You are.

Google currently keeps the Chrome web browser completely up to date, automatically, and any software updates it requires are applied without the user's knowledge or intervention. So too will Chrome OS be updated. But Chrome OS goes a step further by also keeping every single installed application up to date as well. This is an area where Windows simply falls flat, as I mentioned in part one of this article series, and there's no end in sight. Keeping Windows up to date also requires staying on top of your other applications. The more the merrier, right? Just ask Adobe.

When Google says that, with today's PCs, the onus of security is on the user, they're right. And that's not the way it should be. This is the reason why I've spent much of the past decade arguing that Microsoft should be bundling pervasive security protections in Windows, not leaving this to leech-like third parties, as they did for many years, or by creating a low-cost solution, as they did with OneCare, or even by making something free but still separate and individually obtained, as they're doing now with Security Essentials. How is it that these security protections are still not a core part of Windows? We live in Bizarro World. Now check Windows Update and stop your whining. Or check Software Updates on the Mac. It's the same problem.

Security isn't just about updating, of course. Chrome OS feature OS and app sandboxing, so no part of the system can impact other parts, something that was promised in Windows but never really seems to work for some reason. By default, all user data in Chrome OS is "heavily encrypted," a feature that is available in Windows, but almost impossible for the end user to find or implement. So if you lose your Chrome OS PC, no worries. Your data is safe in the cloud, and any thief who obtains your computer can't access any of that data.

Most amazingly, Google is implementing some of the TPM (Trusted Platform Module) security technologies that Microsoft talked up for Longhorn but then only partially implemented--and again, not by default--in Windows Vista and 7. This includes Verified Boot, where the core of the OS is physically separated and inaccessible by software, and thus always known to be safe. That core part of the OS then "cryptographically" checks every other OS component to make sure they're safe--i.e. not hacked or modified by others. If anything is wrong, the system will use a known good backup copy of the OS to set things right. "Chrome OS will be the most secure consumer operating system that has ever been shipped," the company claims.

They're going after business. This was, perhaps, the most dramatic and unexpected part of Google's Chrome OS discussion last week. When you think about netbooks and low-end computing products, you tend to think in terms of consumers. But as Chrome OS's mission as expanded to include all PC types, so too has its target audience. And Google is going after yet another core Microsoft demographic here, businesses and business users.

OK, you're thinking. But surely Google can't offer these users anything as comprehensive as what Microsoft has been able to create over the past couple of decades. And on that note, you're right. Google isn't offering a pervasive, end-to-end replacement for the entire Microsoft stack. There's no real management story here that I can think of, for example.

But Google's message to businesses is a good one and may be more acceptable than you think. As the company notes, businesses care about security and simplicity even more than consumers. And businesses have a third concern: Money. So Google is offering up an interesting TCO (total cost of ownership) story that Microsoft, ultimately, may find hard to match with its current set of business oriented solutions, especially when you talk about smaller, but quickly growing companies that don't have a legacy Microsoft base to worry about.

Not buying it? Consider this: Google intended to ship the first generation Chrome OS product for consumers only. But the company received so much interest from businesses that it stepped back and rethought those plans. CIOs are tired of complexity and cost. They're tired of updating software throughout their environments, over and over and over again, and frustrated by the problems that occur when they do.

This, too, is a revolution. The bad kind, if you're Microsoft.

To rub in this fact, Google carted out that most unexpected of companies, Citrix, one of Microsoft's biggest and most faithful partners. At last week's event, Citrix showed off a system that integrates Chrome OS on the client with Citrix' server-side solutions. What Citrix does, essentially, is virtualize traditional software applications--like those in Microsoft Office--and move them from the PC to the datacenter, where they can be run safely and updated separately from the PC desktop. Microsoft is pushing similar solutions of its own, and in both cases, it's called "applications as a service." Citrix drew an interesting comparison between this model and the model used on the web, as they are conceptually, and to the user, the same thing: Apps are managed somewhere else by someone else but are still accessible from client PCs.

There's an interesting side effect to this model, however. By divorcing mission critical PC applications from Windows, you are also eliminating the need for Windows, especially if the client-side system can be another OS, like Mac OS X or, in this case, Chrome OS. And Citrix has serious penetration with businesses, right now. This isn't a theory. It's something that's already happening.

An essential piece, of course, is the client software, which Citrix calls Receiver. (The server-side solution is called Connector.) Today, Citrix Receiver works on Windows and on Macs, and on smart phones. And now it's coming to Chrome OS. This will provide users with a way to access full-blown, familiar applications like Word and Excel directly from Chrome OS as if they were running natively on the local machine. Not an Office Web App. The real thing.

This is a serious, serious threat to Windows's market dominance. It provides businesses with a way to move from Microsoft-oriented solutions to competing products while giving users continued access to those few key Windows applications they still need. (Eventually, those could be phased out as well.)

Final thoughts

And there you have it: Google's plan to take on Microsoft with Chrome. If you thought that a web browser's ability to threaten Microsoft, still the world's most dominant software giant, was inconsequential, it's time to rethink things. These initiatives together represent what I think is Microsoft's most dangerous threat. And last week's announcement could soon be viewed as a major turning point in Google's war on Microsoft. Google's solutions are still maturing, yes, but make no mistake: This company is already positioned to take on Microsoft. The question now is how or if Microsoft responds.