Speaking at the Proto conference to a bunch of five hundred startup founders and venture capitalists recently, we got into the age old discussion of proprietary software versus open source. There are never any right answers to this but the balance seems to be getting more and more weighted in favour of the open source community as behemoths like Google begin to eye the software space and make the original dream of Sun and other aspiring giant killers a reality !

When Steve Ballmer, the CEO of Microsoft declares in his keynote at the company’s Worldwide Partner Conference in New Orleans that the world does not need a new operating system, its time for the user community to think! The launch of Google’s Chrome Operating System, touted as the new fast lightweight OS of the future which will use the Web as its platform has sent a wave of excitement around the industry – is it justified?

On the face of it, the Chrome OS is indeed a fascinating concept. A fast and lightweight design with a minimal user interface that enables a user to get onto the net in a few seconds, the simplicity of the software architecture which has Google Chrome running within a new windowing system on a Linux kernel enables the web to be the platform for application developers. New applications can be written using every developer’s favourite web technologies and will automatically run on any standards-based browser on the Windows Mac and Linux thereby vastly expanding the user base for Chrome developed applications.

With its eye firmly on the trend towards cloud computing, Google is building a web of relationships with server companies like Acer and HP and while the Chrome OS seems primarily designed for the Netbooks, the undeniable advantages of better security without the threat of viruses and frequent security updates should make it the automatic choice of the new generation which spends most of their time on the web.

However one should not blow the Google Chrome advantage out of proportion. Dominance of the fledgling Netbook segment does not translate automatically to supremacy in the PC and server markets which will need demonstrated ability to manage diverse hardware. Some researchers have taken the skeptical view that Google may take years to build the library of device drivers needed to compete with Microsoft and in the meantime will meet the rather lukewarm response that has faced Linux in the Netbooks market. The move towards a new OS rather than extending the work already done on the Android has also surprised the discerning.

There will be no shortage of experimenters with the new Operating System particularly the price conscious netbook and notebook buyers for whom a fifty to hundred dollar price reduction will be significant. If the best forecasts are proved right and the Chrome OS catches the imagination of a large number of existing and new users, Google may soon be facing the same legal battles that Microsoft has had to contend with over the years. Given the dominance of the Google search engine, there will be many eyes watching how Google ties the new software to its other products and every false move could raise antitrust concerns.

Fighting off competition through a massive installed base and the tight coupling achieved between the operating system, office applications and the internet browser is not new to Microsoft as several battered wannabes like Netscape and Lotus would willingly testify but the new launch and its potential continues to excite industry watchers. Microsoft will continue to emphasise that Windows on the PC rather than a browser centric operating system is the right approach but a comment by the legendary Bill Gates that “the more vague they are, the more interesting it is” may indeed prove prophetic. The software industry itself is at one more crossroads. With IT intensity of all major corporations in steady decline after peaking at the turn of this decade, there is no doubt that we are passing an inflection point where new products and packaged services will be required to service the changing needs of the markets. There is a tremendous opportunity opening up for entrepreneurs with the power of new ideas armed with tools to build applications for a range of new platforms. Will Chrome enable that new generation and make traditional software developers fall by the wayside? As the layers of intrigue and uncertainty fall away to reveal what the new Google offering is truly about, the battle lines are being drawn once again in the software industry!