Can Google Android Beat Windows 7 in the Netbook Market?

Acer announced earlier this week that it's planning to release an Acer netbook with Google Android installed in the third quarter of 2009. It's a major announcement. Right now, Acer offers a variety of netbooks under its Aspire One line and they all have Windows running natively when shipped. For the first time, it's Google -- not Linux -- that will take Microsoft on in the PC space. And by the sound of things, Acer wants to see Android take off.

"Netbooks are designed to be compact in size and easy to connect to the Internet wherever you go," Jim Wong, Acer’s president of IT products, said in a statement. "The Android operating system offers incredibly fast wireless connection to the Internet. For this reason, Acer has decided to develop Android Netbooks for added convenience to our customers."

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Over time, every netbook Acer releases will give consumers the option of installing Windows or Android.

Microsoft has yet to comment on Acer's decision to bring Android into the netbook mix, but you can bet Steve Ballmer and Company are quite upset. For the first time, Google is creeping into a territory that Microsoft fully controls. A few years ago, that might not have mattered. But today, when the company is in a bitter battle online with Google, it matters more than you might think. Microsoft really doesn't like Google.  Google really doesn't like Microsoft. And now, Google is taking aim at the software giant in the hope that it can take it down in the netbook market.

It won't be easy. According to a recent study, more than 90 percent of all the netbooks currently available run Windows. Windows 7 -- Microsoft's follow-up operating system to Windows Vista -- will ship with a netbook-friendly version of the software (Windows 7 Starter Edition) that Microsoft hopes, will solidify its position as the leader in the netbook space.

Another part of Microsoft's strategy is to rename netbooks. Microsoft wants to change the name of netbooks to "Low cost small notebook PCs." At first glance, it might seem like Microsoft's horrible name-picking division is at it again (remember Zune and Bing?), but it might actually be a business ploy.  A "Low cost small notebook PC" might be required, by Microsoft, to use more advanced versions of Windows 7. That means companies like Acer and Asus would be forced to pay more for the software, thus cutting into their netbook margins, which are already too low. It's a boon for Microsoft -- and a real issue for netbook companies.

Perhaps that's why Acer turned to Google. By joining the Open Handset Alliance, Acer won't be required to pay those steep fees for Android like it's forced to pay for Windows. Immediately, Acer can enjoy higher margins on its netbooks. It's a major advantage for Android that Microsoft should be worried about. If Acer is successful in selling Android-based netbooks, you can bet Asus will follow suit. It would only be a matter of time before Android cuts in to Microsoft's 90 percent market share.