Can Schmidt Make Money from Google Chrome OS?

“If our platform strategy works, and there are many users of Chrome OS, there will be many opportunities to build profitable services on top of the platform,” Schmidt said. “That’s been true for all of the successful platform plays in the history of computing. If it’s not successful, then it won’t really matter.”

Chrome OS business could be like Android

Schmidt also provided the usual argument about offering free Web services as a justification to lure users online, and then show them advertising. To illustrate how Google feels Chrome OS will play in the market, he pointed to Android’s mobile operating system. Android is open source, so Google does not make money from the software itself.

However, he said Google expects some 20 mobile phones based on Android by the end of the year. Ideally, users will use these smartphones to access Google Web services, ostensibly clicking on Google ads in the process.

“We do things that are strategic because they get people to use the Internet in a clever way… they will search more, watch more on YouTube, and we know our ads work in a targeted way. We do not require each and every product to be profitable or not profitable,” he said.

Schmidt was also asked what the distribution model will be for Chrome OS: will it come like today’s operating systems, pre-installed on netbooks via deals with computer manufacturers, or will it be a platform users will download onto their machines?

Schmidt said the Chrome OS delivery model has yet to be worked out, adding that Google is talking to PC hardware makers of both Intel and AMD ARM chip architectures. These vendors are designing products “that are very exciting that fulfill vision of cloud computing.” The primary focus for Chrome OS will be speed of boot computation, as well as the seamless use of Web services for cloud computing.

Users need speed

Indeed, Jonathan Rosenberg, senior vice president of product management at Google, called Chrome OS another bet for Google, noting that a whole new generation of Web-based apps demand faster user experience.

“Once you’ve got all your stuff online you should be able to open your computer and get there in a matter of seconds,” he said on the call, jabbing at Microsoft and Apple.