Google's Vision of Life to be Subsidized by Advertisers

The techno-worlds of open-source and standards-compliance are united in celebration on the heels of Google's (GOOG) announcement of a new and upcoming platform called Chrome OS. A new giant has awaken to try and breach the Windows stranglehold of the modern world. Free and widely available Linux couldn't do it, the fawned-over and renowned Mac OS X still can't do it, but perhaps the quirky little giant that is Google can lead a way towards universal, free and open salvation.

Google's announcement that it is in fact working on a full fledged Personal Computer Operating System shouldn't really come as a surprise given that over the past year and a half it has launched the Android OS for Mobile Devices and Chrome, the first browser to have individual process management, a staple of every flavor of operating system in the modern computing world. Rumors of Google's OS work span back years in the blogosphere, but nothing was concrete until today's unveiling of Chrome OS, an operating system to run on full household computers based on Google technology and an open source Linux under-pinning.

By marketing this move into Operating System territory on the back of its growing Chrome browser user-base, Google is squarely taking a web-centric view of the computing world. Coincidentally, after years of perpetual beta, Google removed the beta label off of several products in its Apps suite, charting a path towards an enterprise serious attitude that the company has of yet never employed. First Google Apps gets a fresh coat of grown-up paint and now Google eyes the netbook market as the first for its full fledged operating system. Microsoft (MSFT) better not turn a blind eye to these threats like it has to others who have tried to vault into its dominant space.

After mostly shrugging off Apple's jabs at Windows Vista and watching itself slowly but surely lose some market share, it still took the worst worldwide recession in generations to get Microsoft's attention to start firing back at competitors. This is a company that cannot afford to rest on its laurels, nor one that can afford to blow dollar after dollar in a blinding struggle for relevance in markets that it is an also-ran in (i.e. Internet Search). Google's head on assault began years ago as it made the web (and inherently itself) the first destination for millions of computer users, then it got them hooked on a new way of looking at e-mail, then followed that with calendars and slowly simple documents and spreadsheets, all while being dismissed by market leaders as too simple or too weak for real use. Newsflash to those competitors: Majority of people only really need simple and weak, and powerful office suites and complex operating systems exist on most computers because there was no other choice!

The web browser is the portal to the new technology world and Google, Microsoft and Apple (AAPL) all know it, however Google's become the most nimble of the three at being able to adapt to it. Chrome was a starting point, and while getting 30 million users in 9 months is a good start, it is still just a tiny fraction of the web population, so Google's got a long way to go before it can claim the browser Chrome a success. Chrome OS on the other hand is a different animal, it'll be the only thing users need to get up and running on a new computer while having simple native tasks be quick and web tasks even quicker. As new web technologies evolve along with the growing presence of "offline" web apps, there was still always a need to have some distinction between the browser and the operation system. That line is blurring and perhaps Google's figured this out and may just have found a way to combine the two under Chrome's umbrella. Brilliant, if it were available today, but unfortunately for Google and its users the creation of a platform needs the help of several building partners, since no one buys an operating system off the shelf these days. Except of course for loyal Mac purists, which love having their Mac OS X be the latest and greatest, and given Apple's pricing commitment to the next version of OS X its a hard upgrade to pass up. Kudos to Apple for figuring out people can still want to buy software off the shelf.

$29 for a new version of an operating system, that's an incredible price from the folks at Cupertino, and something Microsoft's bean-counters certainly cannot match with Windows 7. However, someone can, and that someone is Google! Chrome OS, like the Chrome browser, is of course based on open-source software, and in and of itself will be open-source, just like Google's Android OS is for mobile phones. What that means is that Chrome OS will cost NOTHING to computer manufacturers who will shoe-horn it into the netbooks/laptops/desktops of the future. Tough to compete with free! Especially if its quality free from a source as reputable as Google.

But herein lies the rub, what's in it for Google? All these free services and platforms can't just be a secret desire to topple the greatest technology behemoth of all time, can it? Of course not, Google's clearest path to monetization is to get users onto the web as quickly, efficiently and distraction-free as possible, because it wants to be the one doing the distracting with advertisements of all shapes and sizes, from text ads in search, to display ads on the network, to video ads on youTube and everything else under the sun. How do you provide web users the easiest route to the web? Well build your own free multi-lane uber-autobahns with Android and now Chrome OS. The two pillars of the web of the future and Google will have troops at each one, mobile and home computing.

The more time users spend on the web, and the more tasks they begin shifting to the web, the better for Google and the more opportunities Google gets to serve up ads from its vast and numerically superior stable of advertisers. This is why Google is free, in its eyes Life should be subsidized by advertising, and advertising of the future will all become Internet based and completely traceable because it gives the advertiser complete metrics and Return-On-Investment calculations to the tiniest detail that are unmatched in any other ad-based marketplace. And as Televisions and Radios become Internet enabled in the future, bet Google will be right there with the expertise to build out a similar type of ad network. Google is more than willing to subsidize its own development costs if its able to produce a pathway to a Google-centric web that others wouldn't or couldn't replicate.

As encompassing as technology and the web already are in everyday life, we've yet to scratch even the earliest of limits, with every piece of new technology becoming web-enabled the inter-connections between people and their technology becomes further encompassing, with the cloud becoming a centralized hub forcing information separation to consist only of virtual borders. A prospect not completely sold to business just yet, but the power of the crowd, and the cost-effectiveness of the cloud will break down those barriers. How will all this happen, and who will pay for it? As Mark Cuban recently wrote about the prospects of free business, the biggest problem is the continued expectation of free and the inability of the biggest pushers of free-service to keep costs in check and monetization opportunities plentiful. That thesis is very much on the mark, no pun intended, by how it related to business, but what it misses, is the relationship of consumers as the end-goal for the real buyers of free: The advertisers.

The Internet, being the disruptive technological platform that it is, essentially drives costs of everything to near zero. This is due to the simple phenomenon that if everyone is connected to everything, there's always someone who'll do something for cheaper, until the cost of that something is driven close enough to zero to become minuscule. And the ones paying the bills at that point will rely on advertising for profitability, and the advertisers will rely on their ads working to then sell products and services and in turn pay their own bills. Google just happens to be the biggest entity making use of the free economy that is the Internet, using all of its advertisers to pay for its storage, bandwidth and corporate costs.

Advertising is funding an over-indulgence in all things web, but subsidizing life, that seems like a stretch right? Currently yes, but as the computer and the Internet is engulfed by all of the younger generations for communications, commerce, entertainment, social networking, dating & relationships and more, it will start to look startlingly close to the major components of life.

Imagine if the brick & mortar world worked this way? Say there was a Google that would pay for everyone's gasoline, provided they had a billion lane road to a super-shopping center, and drove a car they purchased but had customized by Google to point out interesting things along the road and showcase the occasional billboard tailored to an individual's needs and previous purchases. How many would turn that down? And after sometime of that model working, I'd say the brick & mortar Google would even be willing to take you to the lot and pay for the vehicle, guaranteeing it would always work perfectly on those roads to the mall. All subsidized of course by your friendly neighbourhood Spidermen, umm, I mean Mad Men.

Disclosure: Author owns GOOG, AAPL