Chrome May Not Shine for Google

By MARTIN PEERS

As the careers of numerous writers, singers and businesspeople demonstrate, the true test of creativity isn't the first hit product. It's coming up with a second success.

Google, despite its huge success, is still a one-hit wonder. After spending $6 billion on research and development in the past three years, its efforts to expand beyond its paid-search goldmine have not yet led to another money spinner.

Google has already abandoned attempts at selling radio and newspaper ads. Its Chrome browser, introduced last September, garnered 1.8% of the browser market as of May, according to Net Applications, well behind rivals like Mozilla's Firefox and Microsoft's Internet Explorer.

That history should make investors skeptical about the impact of Google's plans, disclosed late Tuesday, to launch an operating system using the Chrome name. Google's stated goal of making computers easier to use and faster will be endorsed by consumers. And it will add to the competitive pressure that is gradually eroding Microsoft's stranglehold on the operating system world.

But Google has already launched an operating system called Android. It is designed for various devices including cell phones and, like the new Chrome, increasingly popular and cheap "netbook" laptops. Launching another, separate system will be confusing and there is no guarantee how widely embraced, especially by computer-makers, the new product will be.

Anyway, despite complaints about Microsoft software, dislodging Windows from its dominant market position would likely take years. In the government and commercial market, which accounts for a majority of PC sales, 70% of applications require Microsoft Windows, Gartner analyst Michael Silver estimates. He doesn't expect that percentage will drop to 50% for another two or three years, given how long companies keep using applications. That severely limits how quickly users can switch operating systems.

At the least, Google's efforts should maintain pricing pressure on Microsoft. Facing competition from Linux, Microsoft is already selling a cheaper version of Windows in the netbook market.

Just doing its part to crimp Microsoft's profits, at a time when the software giant is spending heavily to boost its share of the search market, may be enough to make Chrome worth its while for Google.

Write to Martin Peers at martin.peers@wsj.com