Google CEO Eric Schmidt doesn't rule out ad-supported and subscription services for applications built on Chrome OS, the search engine giant's forthcoming operating system. The CEO handled several questions about Chrome OS, designed for cloud computing, during the second quarter earnings conference call. Chrome OS is an alternative to Windows and Apple operating systems.
Google's Chrome Operating System
, the forthcoming Linux-based platform for
netbooks, will be released under an open-source license in 2010, but don't tell
Google CEO Eric Schmidt that the company won't make any money off it.
"We do not plan to charge for it, in an open-source
form," Schmidt told financial analysts during the second-quarter earnings
conference call July 16. "There may be other ways we can make money from
For Q2, Google reported
a 19 percent profit growth from the year-ago quarter.
Schmidt indicated that while Google hasn't figured out exactly
how Chrome OS will make money, some form of ad-supported services or
subscription-based micropayments are two options for Google, the bulk of whose
$20 billion in annual revenues comes from search advertising.
He also said "people" are experimenting with
serving ads within applications as a way to make money. However, he did not tie
those comments specifically to Chrome OS, adding that such an infrastructure
for ad-supported software services and micropayments has yet to be built.
The lunge and parry exercise between analysts and Schmidt
highlighted just how serious Google followers are about Chrome OS, which Google
unveiled July 7 as a lightweight, speedy alternative to Microsoft's Windows OS
and platforms from Apple and Linux distributors.
Google is also feeling
pressure from below in the search engine market, where Microsoft's Bing
product is garnering positive reviews from many people who are using it to
see how it stacks up versus Google.
But questions about how Google will distribute Chrome OS and
make money from its came fast and furious from analysts on the call, eventually
exasperating the normally unflappable Schmidt. When asked whether Google
planned to forge a business model around royalties, as independent software
vendors build application on top of chrome OS, Schmidt brusquely said "Too
specific a question. We don't know yet."
"If our platform strategy works, and there are many
users of Chrome OS, there will be many opportunities to build profitable
services on top of the platform," Schmidt said. "That's been true for
all of the successful platform plays in the history of computing. If it's not
successful, then it won't really matter."
Schmidt also provided the usual argument about offering
free Web services as a justification to lure users online, and then show them
advertising. To illustrate how Google feels Chrome OS will play in the market, he
pointed to Android's mobile operating system. Android is open source, so Google
does not make money from the software itself.
However, he said Google expects some 20 mobile phones
based on Android by the end of the year. Ideally, users will use these
smartphones to leverage Google Web services, ostensibly clicking on Google ads
in the process.
"We do things that are strategic because they get
people to use the Internet in a clever way... they will search more, watch more
on YouTube, and we know our ads work in a targeted way. We do not require
each and every product to be profitable or not profitable," he said.
Schmidt was also asked what the distribution model will
be for Chrome OS: will it come like today's operating systems, that is
pre-installed on netbooks via deals with computer manufacturers, or will it be a
platform users will download onto their machines?
Schmidt said the Chrome OS delivery model has yet to be
worked out, adding that Google is talking to PC hardware makers of both Intel
and AMD ARM chip architectures. These vendors are designing products "that
are very exciting that fulfill vision of cloud computing." The primary
focus for Chrome OS will be speed of boot computation, as well as the seamless
use of Web services for cloud computing.
Indeed, Jonathan Rosenberg, senior vice president of product
management at Google, called Chrome OS another bet for Google, noting that a
whole new generation of Web-based apps demand faster user experience.
you've got all your stuff online you should be able to open your computer and
get there in a matter of seconds," he said on the call, jabbing at
Microsoft and Apple.