Chrome started out like a web browser created by Google. Then they came up with a brilliant idea - why not turn the browser into an OS?! It sounds strange at first, but think about it: most people use the Internet more than anything else on their computer, so a web browser OS is a very useful thing. Chrome OS is still not finished yet, but you can try it on VMWare.
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Hit the video for a very friendly video presentation on the next big thing from Google