Google’s OS announcement is reported as a frontal assault on Microsoft, because that’s a story the media loves to tell. Reporters just can’t help casting it that way. They love the battle royal.
But this is not frontal assault. More like a joyride around the Maginot.
Logically GOOG would attack MSFT at its weakest, most inflexible point: netbooks, where Vista doesn’t run at all, and Windows 7 Beta is reportedly slow (and also unfinished).
Just as logically, GOOG would attack MSFT where switching costs are lowest. Netbooks are not used for heavyweight desktop software, and hence their users have lower OS switching costs than users of, say, Windows-based accounting software.
Why do it? Because user-friendly netbooks would hugely increase the total number of Google users. For now, netbook adoption is limited by the expense, footprint and slowness of Windows, and by the user-unfriendliness of Linux.
Linux distros, though super useful (I run several), have low consumer adoption because of less polished UI and peripheral support. These are solvable problems, but remain unsolved because no one entity has had both the resources and interest to polish up free software.
But given is an economic reason, it can be done. Apple built its slick UI and driver stack atop BSD Unix to sell more hardware. If Google thinks it can sell more ads and services atop a consumer-friendly Linux, they certainly have the resources to make Linux friendly to Peoria, Shenzen or Santiago.
Summary: they have no intention of moving up the ladder to heavyweight PCs. Instead, this is an “Innovator’s Dilemma” move, creating a low-end mass market product that will always remain economically unviable for Microsoft.