Google (Nasdaq: GOOG) sent shockwaves through the technology sector late Tuesday night when the company said in a blog post that it would soon be throwing its hat into the ring in the computer operating systems market.

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Rocking the Boat
Google's operating system will be based on its Chrome web browser and could prove to be a major threat to Microsoft (Nasdaq: MSFT) in an area that has long been dominated by Windows. Google is collaborating with personal computer makers such as Acer, Lenovo and Hewlett-Packard (NYSE: HPQ) in an effort to get its new OS onto PCs by the second-half of 2010.

The Chrome OS will run on PCs that employ the use of x86 chips made by Intel (Nasdaq: INTC) and Advanced Micro Devices (NYSE: AMD) as well as those that use chips licensed by ARM Holdings.

Google will initially be targeting the netbook space in this new undertaking. The company has highlighted a user's ability to get online in just seconds, new security features and online software as some of the key benefits that will be made available through the Chrome OS.

An Ongoing Battle for Supremacy
This move by Google into the operating system arena is not its first major confrontation with Microsoft and will certainly not be its last either. In 2007, Google unveiled word-processing and spreadsheet software hoping to chip away at Microsoft's Office software. And this past fall, the company opened up another front in this battle when it launched its Chrome web browser to compete with Microsoft's Internet Explorer.

More recently, Microsoft has fired back at Google. In May, Microsoft introduced its Bing search engine to compete with Google and Yahoo (Nasdaq: YHOO). At the end of June, Google maintained a commanding lead in the search engine space with a market share of more than 60% according to ComScore. Microsoft's search engine is off to a respectable start though. Bing has already managed to snatch up a 10% market share.

The next area that this fight will likely shift its focus to is the software applications circle. The Chrome OS will continue to lead PC users down the path of accessing software online as opposed to the traditional approach followed by Microsoft whereby users install software programs directly on their computer. The notion that the Chrome OS program code will be freely available to developers will make future developments in software applications all the more compelling.

The Bottom Line
Windows runs about 90% of PCs, so Google will certainly have its work cut out for itself in this endeavor. An operating system developed by Google is an exciting concept and could prove to be a formidable challenger to Microsoft over time. If one technology company has the cash and the innovation necessary to make a serious dent in the market share of Windows, it is Google. (For more, check out From Beads To Binary: The History Of Computing.)