The system will be designed at first for low-cost laptops called netbooks, Google said in a blog post. The company is in talks with partners on the project and computers running the software will be available in the second half of 2010.
The plan escalates Google's rivalry with Microsoft, which extends to Web search, browsers and business applications such as word processing and spreadsheets. Windows, Microsoft's flagship product, runs about 90 percent of the world's personal computers. Google is also trying to spur Web-ad sales after reporting its first sequential revenue drop as a public company.