I was listening to the Gillmor Gang yesterday and the guest was Jason Calacanis, CEO of Weblogs Inc (now part of AOL). He put forward the most logical argument for Google bringing out an operating system I have heard that actually sounded like it could be a success. He believed Google would release a free Linux-based operating system that would be distributed pre-installed on Dell and HP computers. Not only would the operating system be free but it would make extensive use of AdSense in order to deliver targeted advertisements in some integrated manner to users. A good portion of this income would be shared with the PC manufacturers (up to 80%), which would provide significant incentive to ship and support Google OS instead of Windows. Also this post-sale income stream would allow Dell and HP to significantly lower their retail prices on the basis that a good portion of their income would occur post-sale.
From the Google perspective this move would extend the use of AdSense and other Google technologies. Similarly from Dell and HP's perspective it would allow them to significantly undercut competitors (like Lenovo and Apple) whilst still maintaining the same operating margins. The combination would not suit gamers but it would definitely find a niche in the entry level market and perhaps in offices if a slightly more expensive, ad-free version was made available. This hypothetical move would also explain why Microsoft is funnelling lots of money into an AdSense competitor so that if and when this Google OS event occurs it is not left out in the cold without a similar strategy.
Picasa image manager running in OpenSUSE 10.1 (click to enlarge)
The logic behind this mirrors what Sun CEO Jonathan Schartz has been talking about for a number of years. Essentially the PC/mobile device becomes like a disposible razor whilst the bulk of the money is generated in the razor blades and shaving cream sales. Not all users will want to be saturated with adverts so Google will have to offer a commercial-free option similar to pay-TV. Even users who choose this option will still be exposed to Google AdSense online as all the defaults will be set to Google services (GMail, Calendar, GTalk, search) so its not a complete loss for the hardware manufacturers/Google over the long term.
Some of the image manipulation tools in Picasa (click to enlarge)
Soon after hearing this opinion two interesting things happened that hinted that there maybe more to this theory than wild imaginations. Firstly Google announced a deal with Dell to ship their software pre-installed on Dell PCs and then soon after that Google released Picasa for Linux (running through Wine emulation). The first deal seems like an early proof of concept test by Google and Dell whilst the Picasa release gives Linux users access to what is arguably the best general purpose photo manipulation and management tool on the market today. I downloaded it and gave it a spin on OpenSUSE 10.1 and it was fast, all but feature-complete and best of all just as good looking in Linux as in Windows. Unfortunately being closed-source it will never make it into a general Linux release but hopefully Google open-source their Google Pack installer package so that automatically installing and upgrading closed-source Linux packages like Picasa does not remain an isolated process.