Google Chief Executive Eric Schmidt said Thursday evening that, for six years, he resisted the idea of building what became the Chrome browser and (soon) operating system, before succumbing to the enthusiasm of Google (GOOG) Co-founders Sergey Brin and Larry Page.

In a wide-ranging on-the-record press conference, Messrs. Schmidt and Page described the origins of the combination browser/operating system.

“At the time, Google was a small company,” Mr. Schmidt said. “Having come through the bruising browser wars, I didn’t want to do that again.”

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Lately I’ve been worried about Firefox. Ever since its debut in 2004, the open-source Web browser has won acclaim for its speed, stability, and customizability. It eventually captured nearly a quarter of the market, an astonishing achievement for a project run by a nonprofit foundation. But recently Firefox seemed to go soft.

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A pair of researchers has discovered a way to use modern browsers to more easily build darknets–those underground, private Internet communities where users can share content and ideas securely and anonymously.

Billy Hoffman, manager for HP Security Labs at HP Software, and Matt Wood, senior security researcher in HP’s (HPQ) Web Security Research Group, will demonstrate a proof-of-concept for Veiled, a new type of darknet, at the Black Hat USA conference in Las Vegas next month.

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The NY Times (NYT) is running an article about a bunch of illustrators complaining that Google (GOOG) offered to promote their work for free as special skins for its Chrome browser. The concern? That Google wouldn’t pay them to promote their work.

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Software maker SAP (SAP) is about to make its second foray into the world of online software.

In September 2007, SAP unveiled an online version of its management software aimed at small businesses. The product languished, with the company’s co-CEOs last year saying that they wouldn’t sell it because it didn’t make any money.

SAP plans to unveil a new online software strategy later this week. This time the target audience is the large businesses that make up SAP’s core customers, says John Wookey, the SAP exec in charge of the project. Wookey has spent the last six months crafting the company’s online-software strategy.

SAP’s software, which businesses use for tasks like balancing the general ledger and tracking inventory, is installed on servers that businesses buy and operate themselves. Businesses pay a hefty upfront fee for it and ongoing payments for product support. Online software is accessed over the Internet through a Web browser. It’s run on servers operated by the vendor, and customers typically pay a monthly subscription fee. Online software is commonly viewed as a threat to companies that sell traditional software because it tends to be less expensive for customers and less profitable for sellers.

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In theory, getting users to ditch one Internet search engine for another should be an easy sell. But doing so is likely to cost Microsoft (MSFT) every penny of the roughly $100 million it plans to spend on an advertising campaign that starts Wednesday for its new Bing search engine.

In economist speak, there are virtually no “switching costs” for a consumer that wants to change from one search engine to another, other than the burden of typing Bing.com into a Web browser instead of Google.com (GOOG). That’s nothing compared to the switching costs of a company changing a complex piece of enterprise software, which may require employee retraining, or a consumer who switches to a new operating system, requiring the purchase of new application programs.

In reality, of course, habit and inertia make it very challenging for a company like Microsoft to improve its 8 percent share of the search market against rivals like Google and Yahoo (YHOO). There’s also the problem that most people say they’re happy with their experience on Internet search engines today, though some of their online behavior–for example, the large amount of time they spend on typical searches–suggests otherwise, according to Microsoft’s research.

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The Street seems to be backing away from the theory that Apple (AAPL) will introduce a cheaper version of the iPhone with a smaller screen and reduced functionality.

Yesterday, Bernstein Research analyst Toni Sacconaghi noted that the company does not appear to be pursuing his idea for an “iPhone Nano,” and that any new iPhones are likely to include both a browser and access to the App Store.

This morning, Kaufman Bros. analyst Shaw Wu reached a similar conclusion. In a research note, he writes that he is hearing Apple is in “fairly advanced development” on three new iPhone models, but that it is not certain they will all be commercialized.

One of those models, he says, has a 2.8 inch screen–smaller than the 3.5-inch screen on the curent version. But he says that one is “less likely to see the light of day in the near term as it appears that software and thus feature sets will be the key differentiator” as opposed to screen size.

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Yesterday’s flare-up about the Terms of Service for Google’s new browser Chrome, followed by the company’s rapid backtracking on the demands it was making of users, left many people wondering about Google ToS in general.

Is it OK for service providers to require that they be exempt from the copyright norm of no re-use without explicit permission? We don’t think it is.

Chrome’s original ToS made far-reaching claims to rights for promotional re-use and sharing with partner companies of any data sent through the Google browser. When users cried foul, the company apologized and said that this standard condition for all Google services wasn’t appropriate for a browser. It’s not uncommon for services online to make such demands–but we argue that there’s a better way for this to be done.

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The Internet is atwitter with Google Chrome’s innovative new features, but there was no clear winner in our speed test comparing Firefox and Chrome–which means your choice of browser may depend solely on features. Apart from a few specific issues (namely process management), many of Chrome’s best features are already available in Firefox 3, proving yet again the power of extensibility. From incognito browsing and the streamlined download manager to URL highlighting and improved search, let’s take a look at how you can bring some of Google Chrome’s best features to Firefox.

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Google’s release Tuesday of a test version of its new open-source web browser, Chrome, marks an important moment in the ongoing shift of personal computing from the PC hard drive to the Internet “cloud.” I distinctly remember when, back in 1988, Apple Computer added MultiFinder to its Macintosh operating system, allowing my beloved Mac Plus to run more than one application at a time. That was, for us Mac users, anyway, a very big deal. Chrome–if we can trust the comic book–promises a similar leap in the capacity of the cloud to run applications speedily, securely, and simultaneously.

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Why is Google building a browser? A better question is, why did it take so long for Google to build a browser? … “The browser matters,” CEO Eric Schmidt says. He should know, because he was CTO of Sun Microsystems during the great browser wars of the 1990s. Google cofounders Larry Page and Sergey Brin know it, too. “When I joined Google in 2001, Larry and Sergey immediately said, ‘We should build our own browser,’” Schmidt says. “And I said no.”

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Historians typically trace the origins of the World Wide Web through a lineage of Anglo-American inventors like Vannevar Bush, Doug Engelbart and Ted Nelson. But more than half a century before Tim Berners-Lee released the first Web browser in 1991, Paul Otlet described a networked world where “anyone in his armchair would be able to contemplate the whole of creation.”

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Back on May 30 of last year, Google released Google Gears, a browser plug-in designed to help Web-based applications work even when they couldn’t connect to the Internet. I was pretty jazzed up about it, and so were my PC World colleagues: We eventually named Gears as the most innovative product of 2007. I still think that Gears is a fabulous idea. But I’m beginning to worry about its viability.

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