Google announced plans to create their own operating system, called Google Chrome OS. It will leverage the Chrome browser, and intends to offer a simplified experience to get on the web and use web applications. It will initially be targeted towards netbooks, though there are questions around potential overlap with Android considering Acer is working on an Android netbook.
Potential Advantages Here are some areas where I see opportunities for Google to take an advantage over other operating systems:
Speed: With the Chrome browser, Google demonstrated how they can compete at the client software level in performance (not just in web applications). Particularly with startup time, if they can make a noticeable difference, people will take note.
Simplicity: Again, with Chrome browser they provided a simple, elegant, easy to use interface. In the Netbook area, people are typically doing more frequent simple tasks as opposed to complicated ones.
Integration with Google web applications and services: Probably Google's biggest competitive advantage is their ability to tightly integrate the operating system with their numerous web sites and applications: search, email, calendar, address book, Picasa for photos, YouTube for videos, and more. They could potentially use Gears to sync copies of data on the local computer with information stored online.
Security: Microsoft is notorious for having frequent security related patches for Windows. Of course, by having the largest market share they are the largest target for hackers.
Maintenance: Software updates are a hassle, they could make this a more streamlined, seamless experience.
Open Source: Google plans to make Chrome OS open source, like Android. This could create a great opportunity for third-party developers to build extensions to the OS or to easily integrate their own applications.
Price: Unless you pay people to use it, you can't really beat free. However, there can be a price other than a monetary one, namely being privacy, which leads me to...
Potential Concerns There are some areas where I am concerned Google will be limiting or tightly constrained:
Privacy: Google's mission is to organize the world's information. They also seek to learn more about their users, in order to improve the experience but also in order to better target ads that they sell. Confidentiality of users' behavior is important. Tracking what terms people enter in to a search engine is one thing, but the ability to track everything they do on their computer is another.
Customizeability/extensibility: Chrome browser is notably behind Firefox in the ability to install extensions and themes to customize the appearance. Firefox also has several more settings that can be changed to tweak the functionality.
Full features/functionality: Gmail is probably the biggest example of an application where Google does not offer the common, conventionally offered set of features and functionality. One infamous example is the inability to sort messages in any other order than the default. Messages are always sorted in reverse chronological order in Gmail, while most other email clients support sorting by sender, recipient, subject, date, and size.
Position Against Competitors Here's how I think Google will stand against the other major operating system makers:
Microsoft Windows: Speed, usability, and security are areas where Windows has weaknesses Google can target. Boot up time has been an issue people have been unhappy with, although supposedly Windows 7 has improved upon that a great deal. There is, however, the well-known "Windows rot" problem of the system getting progressively slower over time with more usage. Apple has always touted the Mac as being simpler and easier to use than Windows. Security issues make up a big headache for Windows, and keeping a Windows system secure requires frequent software updates and multiple software applications to install to defend against and check for malware.
Apple Mac OS: Price, hardware selection, and the open source community are advantages Google could leverage to compete against the Mac. Apple doesn't offer a Netbook yet, but even if they do, users can have their choice of hardware models to choose from to run Chrome OS. Meanwhile Mac OS is restricted to only run (legally) on Apple hardware. Apple computers are generally sold at a premium level, hence the term "Apple tax". Obviously, Chrome OS will not carry a premium price, as it will be free. Apple is notorious for keeping a tight rein on what third-party developers can access and provide (most notably with the iPhone and app store), but Google will make Chrome OS open source, meaning developers will not be limited.
Linux, specifically Ubuntu: Simplicity is the key for Chrome OS against Linux. Even though Chrome OS will be based on the Linux kernel, the front-end user interface will be different. Linux has not really reached mainstream adoption. What is great about Linux and yet frustratingly overwhelming about it at the same time is the multitude of options, settings, applications, and configurations. It's like the Swiss army knife of operating systems. With the emergence and accceptance of Ubuntu there has been a great deal of consolidation, but there are still major variations - like with the different window managers Gnome, KDE, and XFCE. It's great for the mechanically minded and tinkering types, but it's challenging for casual users.
Google's ace in the hole is their ability to tightly integrate Chrome OS with their existing web applications and services. The other major operating system makers can compete in other areas, some more or less, but none will have a chance like this. Microsoft and Apple offer some integration with their online services, but those are not as ubiquitously used as Google's. It will certainly be an interesting competition, and hopefully it will spark innovation from all of them.