Microsoft Corporation (MSFT): Google Inc (GOOG)’s Chrome OS Could Destroy Windows

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Microsoft Corporation (NASDAQ:MSFT) CEO Steve Ballmer was once asked about Chrome OS, Google Inc (NASDAQ:GOOG)‘s cloud-based operating system. It was 2009, and Chrome OS had just been announced. Ballmer laughed.
Google Inc (NASDAQ:GOOG)

With Ballmer announcing his retirement, Microsoft Corporation (NASDAQ:MSFT) remains in a state of flux. Most observers — including those at Microsoft Corporation (NASDAQ:MSFT) — acknowledge that mobile devices have cannibalized the traditional, Windows PC. But tablets don’t work for everyone. Does that mean there will long be a need for traditional workstations, and thus, Windows?

Maybe not. As more PC OEMs introduce Chromebook models, and more software heads to the cloud, Chrome OS could eat away at Windows’ base of traditional PCs.

Chrome OS vs Windows
In many ways, Chrome OS is far superior to Windows. It’s lighter, faster, and impervious to viruses. Chromebooks boot almost instantly, and there’s never a need to install software updates. Most importantly, it’s cheap. Samsung‘s Chromebook starts at just $249. Perhaps that’s why it’s been Amazon‘s top-selling laptop since January.

Of course, there are limitations to using Chrome OS. As its name implies, it’s hardly an operating system in the traditional sense of the word — it’s more or less just the Chrome browser. That means it’s incapable of running traditional PC apps.

Software moves to the cloud
That sounds terrible. After all, what’s a PC if it can’t run apps? Yet, Chromebooks are surprisingly competent. Over the last few years, companies have brought more and more of their software to the cloud, making it accessible to anyone with a web browser.

For example, while Chrome OS can’t run Microsoft’s Office suite, there’s always Office Web Apps, a stripped-down version of Office that can be run right in the browser. At the same time, the growing popularity of cloud-based enterprise apps, like Salesforce‘s CRM, are easily accessible to business users. Even Autodesk‘s AutoCAD can be accessed with a Chromebook, assuming one signs up for the company’s new subscription plan.

This trend remains in its infancy, but it’s one that’s likely to grow in the coming years. Keeping software in the cloud has numerous advantages, particularly to the companies that develop it. Even Microsoft would like to see more applications make their way to the cloud — Windows Azure, Microsoft’s infrastructure as a service, benefits from the trend toward cloud computing. It’s why hedge fund ValueAct, now on the verge of getting a board seat, invested $2 billion in Microsoft.

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