Google is looking to transform the way people use computers with its new operating system, Chrome. Here in Sun Valley I sat down with Eric Schmidt in his first TV interview since the potentially game-changing news was announced Tuesday.

AP

This followed a question and answer session that Schmidt and Larry Page gave journalists. Google's Chrome operating system won't be available until 2010, and initially, Chrome will only appear on netbooks.

But there's good reason for all the buzz: it would be free, open source, and entirely web based, so you could access all your information — music, documents, etc — from any web-enabled computer.

How will Google

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[GOOG  Loading...      ()   ] make money from this new operating system if it's free? Schmidt says that anything that increases web usage, as this is sure to do, is good for Google.

The biggest question surrounding Chrome though is what this means for Microsoft's Windows? It's plain as day that it dominates the market, but it certainly isn't free or open. So how much marketshare could Google get of the relatively young and fast-growing Netbook market?

Schmidt said that the computer makers they've talked to are enthusiastic, and that while Microsoft is the clear leader for now, netbooks with a web-based operating system are the future.

• Google CEO Sees Chrome Netbook News Later This Year

When pressed on the issue Schmidt gave a measured response, saying that people will still want to buy Microsoft's system for "a while". Does that mean that after "a while" we'll have a future without Microsoft's OS dominance? Schmidt would only say that in technology, you never know what will be displaced.

In contrast, Larry Page emphasized that the new OS is less a competitor to Windows, rather more a new way of thinking. Page talked about how frustrated he is with current desktop operating systems and how they always seem to get in his way. This would clear out all the junk. Maybe he steered clear of the Microsoft issue, but a stress-free computer experience sounds attractive.

Here's the interesting back story: as the Google guys tell it, Page and co-founder Sergey Brin have been pushing for the development of a web-based operating system since the inception of the company. Schmidt says he finally relented and when he felt the rest of the business was in place and the technology caught up to the concept. Now it seems Schmidt is Chrome's biggest fan.

Questions?  Comments?