Google plans to launch an operating system to rival Microsoft Windows

The Californian internet firm announced the plans just nine months after launching internet browser Chrome, a product which also pitched its tents onMicrosoft’s turf by competing with Internet Explorer.

Google said the operating system would initially be targeted at unspohisticated, cheap and ultra-portable laptops known as netbooks. Makers of these machines often avoid Microsoft Windows because it is power-hungry and costly.

Microsoft shares fell 1.4 per cent to $22.22 in early Nasdaq trading on the news while Google shares rose 1.2 percent to $401.36.

Called the Google Chrome Operating System, the new software will be in netbooks in the second half of 2010, Google said in a blog post, adding that it was working with multiple manufacturers.

“It’s been part of their culture to go after and remove Microsoft as a major holder of technology, and this is part of their strategy to do it,” said Rob Enderle, principal analyst at Enderle Group.

“This could be very disruptive. If they can execute, Microsoft is vulnerable to an attack like this, and they know it,” he added.