Google's Low Cost PC

Google Inc. and Wal-Mart Stores Inc. may be preparing a low-cost PC that runs an operating system created by Google and could be announced as early as Friday at the Consumer Electronics Show (CES) in Las Vegas, according to a report in the Los Angeles Times.

A Wal-Mart spokesperson called the report “strictly a rumor without any truth to it at all.” A call to Google was not immediately returned.

Google has long been rumored to be working on its own operating system, possibly based on Linux, as well as its own Web browser. Screenshots purportedly from an in-development Google operating system were circulated on the Internet in September, but were later discredited.

Bear Stearns released a report last month speculating that consumers would soon be able to see “Google Cubes” -- small hardware boxes that would allow users to move songs, videos and other digital files between their computers and TV sets.

In recent months, Google has also unveiled services and software delivered through the Internet that go beyond its core Web text search engine and match features provided by Microsoft applications.

But Michael Gartenberg, a consumer Internet analyst with Jupiter Research, said that while Google has done a good job of “co-opting the Windows desktop away from Microsoft,” it faces an “astronomical challenge” if it wants to replace the OS itself.

Wal-Mart has sold low-cost PCs running desktop versions of Linux such as Linspire, Xandros, Novell Inc.’s Suse and Sun Microsystem Inc.’s Java Desktop System. The Bentonville, Ark. retailer started in 2002, though it has restricted such sales to its Brisbane, Calif.-based Web store only.

Wal-Mart.com currently offers a Microtel-branded PC with a 1.5 GHz Sempron 2200+ AMD processor that runs Xandros Linux for $288. That computer does not have a monitor.