Ballmer: We're ready for the Google operating system

My blogging compatriot Steven J. Vaughn-Nichols notes that Google CEO Eric Schmidt has been hinting that Google may release a Google netbook based on its mobile operating system, Android. That's old news to Microsoft: In late February, Steve Ballmer told Wall Street analysts that he fully expects Android-based netbooks.

Back in January, I wrote that I expect netbooks to be released with an operating system based on Google's Android. In fact, some people believe that such netbooks already exist, in use by Google employees, because Net Applications reported that a third of Google employees appeared to be running an operating system whose identity is hidden from traffic monitors. People assumed it was Android, running on netbooks.

In late February, Steve Ballmer spoke to Wall Street analysts, giving an overview of Microsoft's challenges and plans. Here's what he told them about Google and netbooks:

I assume we're going to see Android-based, Linux-based laptops, in addition to phones. We'll see Google more as a competitor in the desktop operating system business than we ever have before. The seams between what's a phone operating system and a PC operating system will change, and so we have ramped the investment in the client operating system.

You can get the entire presentation here.

Ballmer wasn't specific about how Microsoft planned to combat Android-based netbooks. But you can be sure he's got something in mind. Most likely, it's Windows 7, which has been designed to run on netbooks, including taking advantage of touch capabilities. He hints at that when he says "we have ramped the investment in the client operating system."

Will that be enough? For now, it's hard to say. But I do know this: It's all good news for consumers. If Microsoft and Google are slugging it out in the netbook arena, expect to see lower prices and more features.