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Google’s Android to Run Laptops, Challenging Microsoft Windows

By Tim Culpan
June 2 (Bloomberg) -- Google Inc.’s free operating system that’s used in phones will begin running computers next quarter, entering a market dominated by Microsoft Corp.’s Windows and deepening the rivalry between the two software companies.

Acer Inc., the world’s second-largest laptop vendor, will release a low-cost notebook featuring Android in the third quarter, Jim Wong, head of the IT products division at the Taipei-based company, said today. Asustek Computer Inc., pioneer of the sub-$500 laptops known as netbooks, also developed a model that runs on Google’s software, Chairman Jonney Shih said.

Android-powered netbooks indicate the software is powerful enough to replace Windows, which runs about 90 percent of the world’s personal computers. Google’s move into PC operating systems escalates the pressure on Microsoft as it prepares to introduce Windows 7, according to Calvin Huang, an analyst at Daiwa Securities Group Inc.

“This is a negative and may force Microsoft to lower the price of Windows 7,” said Huang, who’s based in Taipei and covers the computer industry. “More and more vendors are adopting Android and non-Windows in their products, so this is a very good chance for Android to penetrate the PC market.”

Acer’s Android-based Aspire One netbook will be cheaper than the Windows XP model, though the two products will have the same electronic components, such as Intel Corp.’s Atom processor, Acer’s Wong said.

Right to Choose

“Competition in the marketplace is good and people have the right to choose software that is best for them,” Amelia Agrawal, a Singapore-based spokeswoman for Microsoft, said in an e-mailed statement. “Microsoft remains confident that people will keep buying Windows, as evidenced by the robust Windows growth on small notebook PCs.”

Google introduced Android in 2007 as a software system for mobile phones. Android is based on Linux, an “open-source” operating system that’s free and developed by hundreds of engineers worldwide. Asustek said in February that its engineers were trying to develop an Android-based netbook this year.

“Anyone can take the Android platform and add code or download it to create a mobile device without restrictions,” Google said in an e-mail. “We look forward to seeing what contributions are made and how an open platform spurs innovation.”

Microsoft is also challenging Google’s main business. The Redmond, Washington-based company last week introduced Bing, an Internet search engine designed to compete against Google’s.

Netbook Pioneer

Asustek introduced the Eee PC in October 2007, initially only offering netbooks running on Linux. After Microsoft jumped into the market, Windows had 85 percent of the mini-notebook market by the fourth quarter of 2008, while Linux accounted for the rest, according to estimates at research firm Gartner Inc.

“Google really does have the brand name and the financial resources to be able to be a rival to Microsoft,” Warren East, chief executive officer of chip designer ARM Holdings Plc, said in an interview today. “The whole Linux community is a bit fragmented when you compare it with Microsoft.”

ARM, based in Cambridge, U.K., is a potential beneficiary of Android’s success because Microsoft’s Windows XP, Vista and Windows 7 don’t run on ARM-based computers.

“Microsoft going forward may have to work on an ARM-based solution,” said Daiwa’s Huang. “If Microsoft doesn’t want to see Google Android get into the PC market, they will have to support ARM otherwise ARM will go perfectly with Android.”

Qualcomm Inc. and Austin, Texas-based Freescale Semiconductor Inc., which make chips based on ARM’s technology, said they expect to release products by the end of the year for netbooks that can run on Google’s operating system.

“It’s important to be able to convince Fnac or Best Buy to put a product on their shelf, and that’s where I think Android is going to be more helpful,” Henri Richard, chief sales and marketing officer of Freescale, said in an interview today.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

Last Updated: June 2, 2009 08:55 EDT