An Operating System for the Cloud

Google is developing a new computing platform equal to the Internet era. Should Microsoft be worried?

From early in their company’s history, Google’s founders, Larry Page and Sergey Brin, wanted to develop a computer operating system and browser.

They believed it would help make personal computing less expensive, because Google would give away the software free of charge. They wanted to shrug off 20 years of accumulated software history (what the information technology industry calls the “legacy”) by building an OS and browser from scratch. Finally, they hoped the combined technology would be an alternative to Microsoft Windows and Internet Explorer, providing a new platform for developers to write Web applications and unleashing the creativity of programmers for the benefit of the masses.

But despite the sublimity of their aspirations, Eric Schmidt, Google’s chief executive, said no for six years. Google’s main source of revenue, which reached $5.5 billion in its most recent quarter, is advertising. How would the project they envisioned support the company’s advertising business? The question wasn’t whether Google could afford it. The company is wonderfully profitable and is on track to net more than $5 billion in its current fiscal year. But Schmidt, a 20-year veteran of the IT industry, wasn’t keen on shouldering the considerable costs of creating and maintaining an OS and browser for no obvious return.

Finally, two years ago, Schmidt said yes to the browser. The rationale was that quicker and more frequent Web access would mean more searches, which would translate into more revenue from ads. Then, in July of this year, Schmidt announced Google’s intention to launch an operating system as well. The idea is that an OS developed with the Internet in mind will also increase the volume of Web activity, and support the browser.

Google’s browser and OS both bear the name Chrome. At a year old, the browser holds a mere 2 to 3 percent share of a contested global market, in which Microsoft’s Internet Explorer has a majority share and Firefox comes in second. The Chrome operating system will be released next year. Today, Windows enjoys around 90 percent of the global market for operating systems, followed by Apple’s Mac OS and the freeware Linux. Does Google know what it’s doing?

Ritualized Suicide
Going after Microsoft’s operating system used to be hopeless. When I covered the company for the Wall Street Journal in the 1990s, I chronicled one failed attempt after another by software innovators to wrest control of the field from Bill Gates. IBM failed. Sun failed. Borland. Everybody. By the end of the 1990s, the quest had become a kind of ritualized suicide for software companies. Irresistible forces seemed to compel Gates’s rivals, driving them toward self-destruction.

The networking company Novell, which Schmidt once ran, could have been one of these casualties. Perhaps Schmidt’s managerial experience and intellectual engagement with computer code immunized him against the OS bug. In any case, he knew that the task of dislodging Microsoft was bigger than creating a better OS. While others misguidedly focused on the many engineering shortcomings of Windows, Schmidt knew that Microsoft was the leader not for technical reasons but for business ones, such as pricing practices and synergies between its popular office applications and Windows.

So for Schmidt to finally agree to develop an OS suggests less a technological shift than a business revolution. Google’s new ventures “are game changers,” he now says.

What has changed? Google has challenged the Microsoft franchise, further diminishing a declining force. The latest quarter gave Microsoft the worst year in its history. Revenue from its various Windows PC programs, including operating systems, fell 29 percent in the fiscal quarter that ended in June. Some of the decline stems from the global economic slowdown. But broad shifts in information technology are also reducing the importance of the personal computer and its central piece of software, the OS. In many parts of the world, including the two most populous countries, China and India, mobile phones are increasingly the most common means of reaching the Web. And in the rich world, netbooks, which are ideal for Web surfing, e-mailing, and Twittering, account for one in every 10 computers sold.

Another powerful trend that undercuts Microsoft is toward programs that look and function the same way in any operating system. “Over the past five years there’s been a steady move away from Windows-specific to applications being OS-neutral,” says Michael Silver, a software analyst at the research firm Gartner.

One example would be Adobe Flash. Such popular social applications as Facebook and Twitter are also indifferent to operating systems, offering users much the same experience no matter what personal computer or handheld device they use. Since so many people live in their social-media sites, the look and feel of these sites has become at least as important as the user interface of the OS. The effect is to shrink the role of the OS, from conductor of the orchestra to merely one of its soloists. “The traditional operating system is becoming less and less important,” says Paul Maritz, chief executive of VMware, who was once the Microsoft executive in charge of the operating system. By and large, he has noted, “people are no longer writing traditional Windows applications.”

Microsoft’s troubles make the company’s OS doubly vulnerable. Vista, its current version, has been roundly criticized, and it has never caught on as widely as the company anticipated; many Microsoft customers continue to use the previous version of Windows, XP. A new version being released this fall, Windows 7, promises to remedy the worst problems of Vista. But even 7 may not address a set of technical issues that both galvanize Microsoft’s critics and stoke the appetites of Brin and Page to create a more pleasing alternative. In their view, the Microsoft OS takes too long to boot up, and it slows down even the newest hardware. It is too prone to viral attacks and too complicated.

Exactly how Google plans to solve these problems is still something of a mystery. Technical details aren’t available. Google has said so little about the innards of its forthcoming OS that it qualifies as “a textbook example of vaporware,” wrote John Gruber on his blog Daring Fireball. Information is scarce about even such basic things as whether it will have a new user interface or rely on an existing open-source one, and whether it will support the driver that make printers and other peripherals routinely work with Windows PCs.

The mere announcement of Chrome already threatens Microsoft, however. The imminence of Google’s entry into the market–following the delivery of its Android OS for mobile phones–gives Microsoft’s corporate customers a reason to ask for lower prices. After all, Google’s OS will be free, and the buyers of Windows are chiefly PC makers, whose profit margins are already ultra-slim.

“It’s all upside for Google and no downside,” says Mitchell Kapor, a software investor and the founder of Lotus, a pioneer supplier of PC applications that was bloodied by Microsoft in the 1990s.

Legacy Code
Fifteen years ago, I wrote a book on the making of Windows NT–still the foundation of Microsoft’s OS family. At the time, I wrongly concluded that developing the dominant operating system was proof of technological power, akin to building the greatest fleet of battleships in the early 20th century, or the pyramids long ago. Windows NT required hundreds of engineers, tens of millions of development dollars, and a huge marketing effort. By the mid-1990s, Microsoft was emphasizing features over function, complexity over simplicity.

In doing so, Microsoft and its cofounder, Bill Gates, seemed to be fulfilling the company’s historical destiny. The operating system as a technological showpiece goes back to OS/360, a program designed by IBM that was immortalized in The Mythical Man-Month, a book by the engineer Frederick Brooks. The historian Thomas Haigh explains, “That was a huge scaling up of ambition of what the OS was for.”

IBM’s 360 mainframe was the first computer to gain widespread acceptance in business, and the popularity of the machine, first sold in 1965, depended as much on its software as its hardware. When IBM used Microsoft’s DOS as the operating system for its first PC, introduced in 1981, it was the first time Big Blue had gone outside its own walls for a central piece of code. Soon, technologists (including, belatedly, IBM) realized that control of the OS had given Microsoft control of the PC. IBM tried and failed to regain that control with a program called OS/2. But Microsoft triumphed with Windows in the 1990s–and became the most profitable company on earth, turning Gates into the world’s richest person. Thus, the OS came to be viewed as the ultimate technological product, a platform seemingly protean enough to incorporate and control every future software innovation and at the same time robust enough to drag outdated PC machines and programs into the present.

It couldn’t last. The main reason why control of the OS no longer guarantees technological power, of course, is the ascent of the Internet. Gates made few references to the Internet in the first edition of his book The Road Ahead, published in November 1995. Neither Windows NT nor its mass-market incarnation, Windows 95, was intimately connected to the Web. With the spread of Netscape’s browser, though, Gates began to realize that the individual PC and its operating system would have to coöperate with the public information network. By bringing a browser into the OS and thus giving it away, Microsoft recovered its momentum (and killed off a new generation of competitors). Then, preoccupied once again with control of the OS, Microsoft missed the sudden, spectacular rise of search engines. When Google’s popularity persisted, Microsoft was unable to do with the search engine what he had done with the browser.

In one sense, this failure to adapt to a networked world reflected the integrity of Gates’s vision of the PC as a tool of individual empowerment. In the mid-1970s, when the news of the first inexpensive microprocessor-based computers reached Gates at Harvard, he instantly understood the implications. Until then, computers had been instruments of organizations and agents of bureaucratization. The PC brought about a revolution, offering the little guy a chance to harness computing power for his personal ends.

Technology is now moving away from the individualistic and toward the communal–toward the “cloud” (see our Briefing on cloud computing, July/August 2009). Ray Ozzie, Microsoft’s chief software architect, who has been the most influential engineer at the company since Gates retired from executive management, describes the process under way as a return to the computing experience of his youth, in the 1970s, when folks shared time on computers and the network reigned supreme. Cloud technologies “have happened before,” he said in June. “In essence, this pendulum is swinging.” Similarly, Schmidt recalls how, in the early 1980s, Sun Microsystems’ OS was developed for a computer that lacked local storage.

The return to the network has big implications for the business of operating systems. Computer networks used to be closed, private: in the 1960s and ’70s they revolved around IBM mainframe operating systems and, later, linked Windows machines on desktops and in back rooms. Today’s computer networks are more like public utilities, akin to the electricity and telephone systems. The operating system is less important. Why does Google want to build one?

Successful operating-system designs continue to pay off big, though increasingly in cases where the system is well integrated with hardware. Apple’s experience is illustrative. For years, people advised Steve Jobs, Apple’s cofounder and chief, to decouple the Mac OS from the company’s hardware. Jobs never did. Indeed, he moved in the opposite direction. With the iPod and then the iPhone, he built new operating systems ever more integrated with hardware–and these products have been even more successful than the Macintosh. “For Apple, software is a means to an end,” says Jean-Louis Gassée, who once served as the company’s chief of product development and who has since founded his own OS and hardware company, Be. “They write a good OS so they can have nice margins on their aluminum laptop.”

The effort to create a good OS carries risks. The biggest one for Google is that expectations will outstrip results. Even though the company plans to use a number of freely available pieces of computer code–most notably the Linux “kernel,” which delivers basic instructions to hardware–its new system can’t be assembled, like a Lego plaything, out of existing pieces. Some pieces don’t exist, and some existing ones are deficient. There is the real chance that Google might tarnish its reputation with an OS that disappoints.

Then there is the risk that cloud computing won’t deliver on its promise. Privacy breaches could spoil the dream of cheap and easy access to personal data anywhere, anytime. And applications that demand efficient performance may founder if they are drawn from the cloud alone, especially if broadband speeds fail to improve. These unknowns all present substantial threats.

Magic Blends
David Gelernter, a computer scientist at Yale University, has described the chief goal of the personal-computer OS as providing a “ ’documentary history’ of your life.” Information technology, he argues, must answer the question “Where’s my stuff?” That stuff includes not only words but also photos, videos, and music.

For a variety of good reasons–technical, social, and economic–the cloud will probably never store and deliver enough of that “stuff” to render the OS completely irrelevant. You and I will always want to store and process some information on our local systems. Therefore, the next normal in operating systems will probably be a hybrid system–a “magic” blend, to quote Adobe’s chief technology officer, Kevin Lynch. Predicting just how Microsoft and Google will pursue the magic blend isn’t possible. “We hope we are in the process of a redefinition of the OS,” Eric Schmidt told me in an e-mail. But one thing is certain: the new competition in operating systems benefits computer users. Microsoft will do more to make Windows friendlier to the new networked reality. No longer a monopoly, the company will adapt or die. It’s worth remembering that in the 1970s, AT&T, then the most powerful force in the information economy, “made a set of decisions that doomed it to slow-motion extinction,” says Louis Galambos, a historian of business and economics at Johns Hopkins. “Microsoft is not immune to ‘creative destruction.’ ”

Neither is Google. To completely ignore operating systems in favor of the cloud might be an efficient route to failure. And there is much to admire in the very attempt to create a new one. For Brin and Page, it is as much an aesthetic and ethical act as it is an engineering feat.

G. Pascal Zachary wrote Showstopper on the making of Windows NT.

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