Android Gains on Microsoft

When personal computer manufacturers Acer and Asutek Computer announced that they were getting into the smartphone business, industry watchers wondered if they would use Google's free Android operating system. It turns out that Google (GOO) won't have to wait for those smartphones after all. According to Bloomberg, both Acer and Asutek plan to introduce new, low-cost netbooks that run on Android. Although Acer will also produce a Windows-based netbook, the Android model will be less expensive, presumably because Acer won't have to lease the operating system.

In addition, Computerworld reports that the company Elitegroup Computer Systems, or ECS, has just rolled out an Android-based netbook of its own. Like Acer and Asutek, ECS will charge less than $500 for the machines, but doesn't plan to shop them past the consumer market. Rather, the company's clientele will probably be companies that buy computers in bulk for their businesses. Nonetheless, this is another blow to Microsoft (MSFT).

Currently, Microsoft has its operating system on 90 percent of the world's personal computers, and is about to roll out Windows 7 for the open market. But now that more and more PC manufacturers are deploying Android as well, Google is primed to penetrate the operating system market. It won't make any money, of course, since Android is free. But the point was always to offer free services in order to keep users coming back to Google for everything they need. And as Bloomberg reporter Tim Culpan points out, Android's new popularity will almost certainly force Microsoft to lower its Windows 7 price, cutting into its cash flow right at the moment it's going head-to-head with a company that's sitting on $16 billion.

As if Google doesn't have enough high-octane foes, it's about to pick a fight with another giant: Amazon (AMZN). The Wall Street Journal reports that the search giant is planning to launch software that will allow book publishers to sell digital versions that will work with any computer, e-book, or smartphone that can access the Web. This puts Google in direct competition with Amazon, which sells electronic versions of books for its Kindle. What's next, Google—taking on Jesus Christ or something? You gonna offer a Linux-based patch that lets us walk on water?