Google's new platform Chrome aims to show Microsoft's Windows the door

It is the technology industry's equivalent of the irresistible force meeting the immovable object. Google, the web upstart founded 11 years ago, has announced it will go head-to-head with Microsoft with an operating system (OS) – the programs that make a computer work – for machines ranging from handhelds up to desktop computers.

If Google can get enough people to buy computers running its new Chrome OS, it will cut into Microsoft's two biggest cash cows: Windows and its Office suite of programs, including Word, Excel and PowerPoint. Microsoft, which once spoke of "cutting off the air supply" of a web-based rival, Netscape, has woken up to find a new threat reaching for its throat.

The confrontation has been expected for years – despite Google's insistence it had no such ambitions – but it still caught observers by surprise when a Google spokeswoman confirmed to IT news service IDG that it plans to announce this week the names of computer makers in Taiwan and China signed up to work with Chrome OS, and said that it will show off Chrome's user interface later this year.

The challenge to Microsoft is implicit, yet also direct. In a blog post, Sundar Pichai, Google's vice-president of product management, and Linus Upson, engineering director, explained that "the operating systems that browsers [used to access pages on the web] run on were designed in an era when there was no web". That is a swipe at Windows, which dates back to the 1990s. Pichai and Upson also promise that with Chrome OS, "we are going back to the basics and completely redesigning the underlying security architecture of the OS" to ensure that "users don't have to deal with viruses, malware and security updates" – another swipe.

An operating system is the set of programs that makes a computer act as it does: the same computer can run Windows, Apple's Mac OS X or the free Linux operating system. Each computer will then behave differently, and do different things; but connecting to the internet is key for all. So even if Google's dramatic attack fails, it still wins.

The reason is its dominant position as a search engine – a key activity – and in selling adverts against search ("AdWords") and web pages ("AdSense"), which is how it makes money. As Nick Carr, an author and journalist who has studied Google for books such as The Big Switch, observes: "For Google, literally everything that happens on the internet complements its main business. The more things people and companies do online, the more ads they see and the more money Google makes.In addition, as internet activity increases, Google collects more data on consumers' needs and behaviour and can tailor its ads more precisely, strengthening its competitive advantage and further increasing its income."

Chrome OS will be based around the Linux operating system, and will initially be offered on "netbooks" – the small, cheap laptops that have seen explosive growth in the past two years due to their size, weight and price. Data from IDC suggests that while the PC market as a whole shrank by 6.8% in the first quarter of 2009, netbook shipments kept growing (from a low base) to 9.5% of all computer shipments. If any significant share of the market moves to Chrome OS, Microsoft will lose the Windows revenue and revenue from its Office products, which won't run on Linux. That could slowly bleed the giant to death.

Not everyone is convinced Google will succeed, however. Michael Gartenberg, a consumer devices analyst at Interpret, based in Los Angeles, was unimpressed. "Folks who have never seen it, used it or spent five minutes with it are claiming it's huge threat to Windows.(If that's the case, wouldn't it also be a threat to Apple and Mac OS, an argument I've not seen this morning?)" He added that history doesn't run in favour of Chrome OS's principles: "Consumers have overwhelmingly rejected Linux-flavoured netbooks for Windows-capable machines that they could actually accomplish things on, such as run PC applications."

He thinks that the aim is to distract from Microsoft's next version of Windows,release of latest version of Windows 7, which will be released, due this October: "By creating of lot of fear, uncertainty and doubt this morning (after all, every PC runs web-apps really well and no one is looking for devices that web based only for the most pat). they hope to take the attention and lustre off Windows 7."

It may in fact be rival Apple that determines whether Chrome OS succeeds. Its iTunes music playing, organisation and purchasing program is installed on around 100m computers, more than half of which are Windows machines. If Google can persuade Apple to provide a version that runs on Linux, people may move over to Chrome OS. Otherwise, leaving behind their music collections the dearest digital property many of them own, might be too much. Still, Google has a good chance of getting a hearing: Eric Schmidt, its chief executive, has been on Apple's board since 2006. Perhaps Steve Ballmer, Microsoft's chief executive, should start worrying now.